Hopes
that
the
UK
economy
may
be
at
the
end
of
a
long-term
gross
domestic
product
(GDP)
stalemate
have
risen
following
data
from
the
Office
for
National
Statistics
(ONS)
suggesting
growth
is
now
in
positive
territory.
Despite
the
decline
in
economic
output
at
the
end
of
2023,
UK
GDP
grew 0.2%
on-month
in
January,
the
ONS
said
today.
In
the
final
quarter
of
2023,
it
had
been
feared
the
UK
economy
was
already
in
recession.
When
Will
the
Bank
of
England
Cut
Rates?
Michael
Field,
European
Market
Strategist
at
Morningstar,
says
this
most
recent
data
could
mean
the
UK
has
already
moved
on.
“To
put
this
number
into
perspective,
the
UK
economy
has
effectively
been
at
a
standstill
for
the
last
12
months,
with
the
government’s
own
forecasts
pointing
to
growth
of
less
than
1%
in
2024,”
Field
says.
However,
he
also
believes
the
UK
economy
is
not
yet
out
the
woods.
“Inflation
in
the
UK
remains
high,
at
almost
twice
the
bank
of
England’s
targeted
level
[of
2%];
however,
central
bankers
are
walking
a
tightrope
in
balancing
the
danger
of
persistent
inflation
with
a
weak
economy.
“Interest
rates
sit
at
16-year
highs,
which
gives
central
bankers
some
room
for
manoeuvre
at
least.
We
expect
a
rate
cut
sooner
rather
than
later.”
The
ONS
also
found
industrial
production
had
declined
0.2%
from
December.
It
had
experienced
a
boost
of
0.6%
at
the
end
of
last
year.
Meanwhile,
imports
rose
1.4%
to
£72.39
billion
from
over
£71
billion
a
month
earlier,
and
exports
rose
at
a
slower
pace
month
on
month
of
0.7%
to
£69.26
billion
from
over
£68
billion
in
the
same
period.
Room
for
Disagreement
on
UK
Rate
Cut
Lindsay
James,
Investment
Strategist
at
Quilter
Investors, agrees
the
ONS’
figures
could
represent
the
start
of
a
slightly
more
positive
period
for
the UK.
But
she
disagrees
with
Field
on
the
timing
of
a
rate
cut.
“Inflation
is
expected
to
fall
in
the
coming
months,
due
in
part
to
a
lower
energy
price
cap
which
could
help
alleviate
the
pressure
on UK households
and
support
the
recovery
of
the
consumer-driven
economy,”
she
says.
“For
now,
economic
conditions
remain
relatively
tough,
and GDP in
January
was
still
0.3%
lower
than
the
same
month
a
year
ago.
“The
recent
Budget
highlighted
the
tightrope
that
the
government
must
walk
in
balancing
the
growing
needs
of
departments
with
the
desire
to
lower
taxes,
leaving
little
scope
for
fiscal
stimulus.
This
therefore
leaves
the
Bank
of
England
under
pressure
to
soon
play
its
part
in
driving
economic
growth
by
cutting
interest
rates.
“This
slight
uptick
in
monthly GDP does
little
to
reduce
that
pressure,
but
we
can
expect
it
to
stand
firm
for
a
while
longer
yet.”
At
the
Budget
last
week,
chancellor
Jeremy
Hunt
outlined
the
Office
for
Budget
Responsibility’s
assessment
that,
contrary
to
the
Bank
of
England’s
own
more
pessimistic
predictions,
inflation
would
hit
target
this
year.
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