Economy Rebounds in First Quarter, But Slow Expansion Continues due to High Interest Rates

The British economy showed strong growth in the first three months of the year, ending what economists had termed a “technical recession.” According to official figures from the Office for National Statistics, the economy expanded by 0.6% in the first quarter, surpassing the 0.4% increase predicted by economists. This growth was seen across a range of sectors, indicating broad-based strength.

Despite this positive rebound, overall economic expansion has been sluggish over the past year due to high interest rates that have remained at 5.25%, the highest in 16 years. These high borrowing costs have dampened the British economy.

There is optimism that interest rates may be lowered soon to stimulate economic growth. Bank of England Governor Andrew Bailey suggested that a rate cut could be implemented in June if inflation continues to decline. While high interest rates have helped to curb inflation, they have also had a dampening effect on the British economy by increasing borrowing costs.