KPMG comments on today’s GDP data

“UK economy likely to have emerged from recession but outlook remains weak” says Yael Selfin, Chief Economist at KPMG UK.

“Economic activity picked up to start the year with a relatively broad-based recovery across sectors. Forward looking indicators point to further strengthening of momentum in February, bolstering the prospect that the UK experienced a short and shallow recession.

“Although economic performance has somewhat improved, the outlook remains relatively gloomy. Economic growth is not expected to materially pick up this year with demand impaired by the lingering impact of high interest rates. Meanwhile on the supply side, the sluggish outlook for business investment and weaker public sector investment will compound weakness in productivity and constrain long-term growth.         

“The weak economic backdrop coupled with an improving outlook for inflation should allow the Bank of England to begin cutting interest rates from the summer onwards, despite the tax cuts announced in last week’s Budget. Nevertheless, the overall policy stance will still be restrictive with interest rates expected to remain above the neutral rate until summer 2025.”

-Ends-  

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About KPMG UK

KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 18,000 partners and staff. The UK firm recorded a revenue of £2.96 billion in the year ended 30 September 2023.  

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 273,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.