UK Economy Sees Surprise Growth in March Despite Iran War Shock
The UK economy expanded faster than expected in March even as the Iran war added to global uncertainty. The data was driven by a recovery in services activity and a pick-up in industrial output. Analysts say it is a key signal for the Bank of England's rate path.
Data published by the UK Office for National Statistics showed the economy grew more than expected in March. A rebound in services activity and a pick-up in industrial output were the main drivers of growth. The numbers landed at a moment when the Iran war is intensifying global risks.
The pound posted a modest gain against major currencies in the initial reaction. City analysts said the economy looked more resilient than feared, but warned that high energy prices could weigh on activity in the coming months. Brent crude trading above 100 dollars a barrel keeps a floor under headline inflation expectations.
Ahead of the Bank of England's June policy meeting, market participants started repricing the rate-cut timeline. Stronger growth raised the odds that cuts will be pushed further out. The Treasury said it would maintain fiscal discipline and that the recovery should not derail the medium-term spending plan.
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