DAVY VIEW

This morning’s UK GDP revisions show an unchanged pace of quarterly growth in Q1 2026, but downward revisions to Q3 and Q4 2025 mean a lower annual pace of 0.9% to begin this year. Services output was also weaker than previously estimated, implying a weaker quality of growth took place, and putting our forecast for 0.9% growth in 2026 under pressure. However, it also weakens the case for Bank Rate hikes, and we continue to expect the next change will be a cut; since we made this call in early May, market pricing has moved steadily in this direction.