UK GDP grew less than expected but “still an encouraging figure”
Data released this morning confirmed that the UK economy grew 0.2% in the first quarter of 2010. The figure was worse than expected, with most economists predicting GDP to come in at 0.4%, matching the quarterly rate for the end of 2009.
Mark Bolsom, Head of the UK Trading Desk at Travelex, the world’s largest non-bank FX Payments specialist, said, “Given the bad weather in the early months of 2010 and the negative impact it had on many businesses, this figure could have been a lot worse. It’s encouraging that the economy sustained growth even when adverse weather conditions prevented many people getting to work.
“Certainly the government will be relieved that the bad weather didn’t derail growth, but I don’t think the figure really lends itself to any particular political party – it’s fairly neutral."
Bolsom continues, “Many commentators have speculated this week that as economic data becomes consistently stronger, the Bank of England are likely to raise interest rates sooner than expected. I feel it is very unlikely they will do so. Even if GDP had met the forecasted 0.4% growth, it still wouldn’t have been strong enough to support an interest rate hike. I think it’s safe to say rates will stay at 0.5% until 2011 at least.”