Official figures released on Friday show that the British economy experienced a strong rebound in the first quarter of the year, marking the end of what economists had referred to as a “technical recession”. The Office for National Statistics reported a 0.6% growth in the economy during the first three months of the year, exceeding the 0.4% growth that economists had predicted. This growth was seen across various sectors of the economy, indicating a broad-based recovery.
The recent growth in the economy comes after two consecutive quarters of modest declines, which technically qualifies as a recession in the U.K. Despite the positive quarterly growth, the overall growth of the British economy over the past year has been sluggish. This can be attributed to the high interest rates, which have been at a 16-year high of 5.25%. These high rates have contributed to cooling down the economy by making borrowing more expensive.
However, there is optimism that interest rates may be on the decline soon. Bank of England Governor Andrew Bailey hinted at a possible rate cut in June if inflation continues to decrease. While high interest rates have helped in controlling inflation, they have also had a negative impact on the overall British economy. An anticipated rate cut could provide a much-needed boost to the economy by making borrowing more affordable.