The UK economy grew 0.6% in the first quarter, according to preliminary figures from the Office for National Statistics (ONS). This growth rate matches economists' expectations and follows a revised growth of 0.2% in the fourth quarter. While the data reflects a relatively strong outturn, it's important to note that this growth is largely a reflection of old news, as the Iran war has already started to impact the global economy and the UK's macroeconomic data. The conflict has disrupted energy supply chains, causing consumer prices to rise, particularly due to soaring fuel costs. The Bank of England is expected to hike interest rates later this year, as the severity of the hit to the British economy depends on the duration of the war. However, the UK economy is showing resilience, with spending data and PMIs suggesting a period of adjustment rather than a downturn. The political landscape is also uncertain, with Prime Minister Keir Starmer facing calls to step down following the Labour Party's poor performance in local elections. This political crisis has led to a rise in U.K. borrowing costs, with the yield on the benchmark 10-year gilt trading at over 5%. Despite these challenges, the government is maintaining its economic plan, emphasizing the need for stability to ensure families and businesses remain better off. The UK's economic outlook remains a topic of interest, with the Iran war and political uncertainty casting a shadow over the country's future.
