UK Economy Posts Strong Q1, But Iran War Casts A Shadow Over Outlook

• Britain's economy grew unexpectedly in March to cap another strong first quarter, suggesting it was in better ‌shape as the Iran war escalated, though economists said seasonal distortions were flattering the figures.
• Gross domestic product increased by 0.3% month-on-month in March, the Office for National Statistics (ONS) said, against expectations in a Reuters poll of economists for a 0.2% contraction.
• For the first quarter, the economy expanded by 0.6%, marking the third year ​running of conspicuously strong growth in the first quarter. Economists said measurement issues related to shifts in ⁠spending after the pandemic may be contributing to that pattern.
• Raj Badiani, economics director at S&P Global Market Intelligence, said the stockpiling ​of goods sparked by the Iran war may also have pulled forward demand in March.
• "Nevertheless, recession risks have risen, and we now ​expect the UK economy to contract mildly in the second and third quarters of this year," Badiani said, citing a coming inflation surge caused by higher oil prices and pressure on the Bank of England to raise interest rates.
• The ONS said partial spending data for April "pointed to some weakening ​going into the second quarter". It remains to be seen how renewed uncertainty in Westminster - with investors now unsure about the political ​future of Prime Minister Keir Starmer - will weigh on the economic outlook.

(Source: Reuters)