Quarterly highlights:
UK economy continues to stagnate, but growth has proved more resilient than expected
UK GDP grew by 0.2% month-on-month (m/m) in April following a 0.3% fall in March, and no growth in February. We expect GDP to fall by 0.1% over Q2 as a whole, before rebounding later this year.
CPI inflation has eased, although not as quickly as the Bank of England had hoped
While headline inflation eased to 8.7% in April and May, measures of domestic price pressures – services and core inflation – remain stubbornly elevated. This prompted the Bank of England to raise interest rates to 5%, their highest level since 2008.
Pay growth accelerated in April, underpinned by the tight labour market
The labour market remained tight in the quarter to April, with the ratio of vacancies to unemployed persons remaining high by historical standards. This helped push average regular pay growth to 7.2%, its the fastest pace on record (outside of the pandemic).