On Friday, the British economy showed signs of recovery as official figures revealed a growth of 0.6% in the first quarter of the year. This positive growth marks the end of what economists had called a “technical recession” in the U.K., which was defined as two consecutive quarters of minor declines. Despite this growth, the British economy has experienced minimal growth over the past year, with high interest rates at their highest in 16 years standing at 5.25%. These high rates have helped in controlling inflation but have also put a strain on the economy.
The growth was seen across various sectors of the economy, indicating a broad-based strength. However, despite this positive development, there is optimism that interest rates may be decreasing soon, as suggested by Bank of England Governor Andrew Bailey. He hinted at a possible rate cut in June if inflation continues to decrease. While high interest rates help in controlling inflation by making borrowing expensive, they have had a negative impact on the overall British economy. A potential rate cut could provide some relief and boost economic activity in the coming months.