Hassouna Al Tayeb (Abu Dhabi)
Aside from rising inflation, debt costs and problems for banks, the UK economy is moving faster than many economists had thought.
The latest data indicates an increase in retail sales and an improvement in consumer sentiment, in addition to the state of activity in the business sector.
The volume of retail sales, the goods sold to the UK consumer, increased by 1.2% in February, after a jump of 0.9% in the previous month, according to the UK’s Office for National Statistics.
While analysts expected the growth of these sales to not exceed 0.5%, they rose for the first time since August 2022, surpassing pre-Covid-19 levels.
Recent data confirms that the UK economy has achieved some growth, despite the many obstacles that stand in the way of the recovery of the global economy.
According to official data issued during the month of March, the inflation rate rose unexpectedly to about 10.4% in February, from 10.2% in January, not far from the record achieved in October at 11.1%.
interest rate
In the immediate aftermath, the British Central Bank tended to raise the interest rate to 4.25%, for the 11th time in a row since December 2021.
What added to the challenges was the state of turmoil in the global banking sector, in light of the collapse of Silicon Valley Bank and the merger of Credit Suisse with UBS, which makes banks more cautious when offering any new loans.
Chris Williamson, chief economist at S&P Global Market, confirms that the PMI is consistent with the growth rate that the UK economy was able to achieve at 0.2% during the first quarter of this year, in a clear improvement from the recession in the economy. over the past three quarters.
Andrew Bailey, Governor of the British Central Bank, expects Britain’s ability to overcome recession during this year 2023, especially since growth expectations look much better than in the past.
Bailey’s comments coincided with the slow rise in business costs, at their slowest pace since March 2021.
Consumer confidence
Separate data from the GfK Research Institute indicates that British consumer confidence increased by 2% during the month of March, compared to February.
However, retail sales are still down 0.3% during the first 3-month period of this year, compared to the previous 3-month period.
Darren Morgan, Director of the Department of Economic Statistics at the Office for National Statistics, said that the picture is still unclear, in light of the weak growth rate of retail sales, especially over the past 18 months, as rising prices negatively affected the strength of consumer spending.
Moreover, bidding by malls and food stores has boosted sales, while cost-of-living pressures have pushed consumers to abandon fast food and eat out.
Some economists predict that the retail sector may face some difficulties over the next few months.
Although real household incomes are already past the worst, the chance that higher interest rates will affect business activity remains.
