UK Economy Stuck in Low-Growth Quagmire, BoE Risks Inflation Backlash
The UK economy is facing a constrained environment, with sluggish growth and inflation above target.
According to Societe Generale, the country's GDP expanded by just 0.1% in the three months to November 2024, reflecting the impact of high interest rates on consumer spending and business investment.
Inflation, as measured by the Consumer Prices Index, stood at 2.5% in December 2024, above the Bank of England's 2% target.
The French investment bank's analysis points to a delicate balancing act for policymakers as they navigate this challenging macroeconomic environment.
The Bank of England faces significant policy risks, with persistent wage growth and services inflation posing key challenges.
The BoE's base rate stands at 4.5% following a period of gradual reductions from the peak of 5.25% in 2024.