The UK growth figures for the first quarter of 2018 were expected to be bad but the underperformance surprised most economists.
From a Q4 2017 growth figure of 0.4%, the Bank of England was looking for a slight drop of 0.3% and most forecasters went along with that or maybe 0.2%, with the ONS reporting growth of just 0.1%. The construction industry, which was impacted to a certain extent by the bad weather in the quarter, slowed up activity in the sector by 3.3%. While this is an estimate there is a worry that the unseasonal poor weather in March may well cause revisions that could produce an actual flat growth rate.
With the uncertain Brexit consequences hanging over the currency long term, markets do not need much excuse to sell sterling, sharply lower against the US$ following the Office of National Statistics announcement and the prospect of interest raises in the UK disappearing for some time. A series of ¼% rises was anticipated but this is unlikely to happen until growth starts picking up.
Not all bad for borrowers but for investors looking for some kind of meaningful return in a low risk savings account, you will struggle to get anything approaching 2%.
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Post Date: April 27th, 2018