UK GDP data 'essentially guarantees' BoE rate slash
|Britain's economy got off to a very shaky start to the final quarter of the year as it posted a modest, albeit unexpected contraction. Activity continues to be hamstrung by a number of ongoing factors, but acute uncertainty heading into the budget undoubtedly made matters worse.
While the budget is now in the rear view mirror, what we're left with is another batch of punishing tax hikes that we expect to dampen business and consumer activity in the coming months. The UK jobs market is already reeling from the measures introduced by Labour last year, and further pain here seems practically unavoidable.
Not that it was in any doubt at all, but today's data essentially guarantees that the Bank of England will slash rates again next week. The focus will instead be on the guidance for rates in 2026. Any dovish undertones that hint at further easing ahead could bode ill for the pound.
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