DAVY VIEW

The UK economy has performed better than expected in 2025, and the expansion has been quite broadly based. February saw a strong rise in manufacturing, which unwound in March in line with expectations. However, a strong result for services suggests there is more to the story than simply “frontloading” of activity to Q1, in anticipation of April’s tariff announcements by the US. With wage growth remaining above 5% and consumer price inflation set to remain above 3% for the rest of the year, a stronger trajectory for the UK economy could limit the Bank of England to just one further cut to Bank Rate in H2.