“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.”
