In the first quarter, the British economy returned to growth, with an increase of 0.6% on the previous quarter and 0.2% year-on-year. This puts an end to the recession that marked the 2nd half of 2023. The rebound affected both services - which returned to growth after three quarters of contraction - and industrial production, driven by the manufacturing sector in general and transport production in particular.
While consumer spending is showing signs of life (+0.2% on the previous quarter), foreign trade is making the strongest contribution to growth (+0.6%). This contribution is explained by the fact that, due to weak consumption in the UK, imports (-2.3%) fell more sharply than exports (-1%). This improvement in foreign trade is hardly reassuring.
Faced with these mixed figures, the pressure on the Bank of England to start cutting its key rates is mounting. At its May meeting, the Bank chose to leave rates unchanged, but clearly signaled a first cut in June, followed by others later in the year.
This is likely to weigh on the British pound, but will give (a little) hope to the Conservative party ahead of the parliamentary elections.
As the British economic situation remains delicate, we are only investing in the UK as part of our dynamic portfolio, as well as through the purchase of individual stocks.