DAVY VIEW

UK GDP bounced back from a weaker April, with month-on-month (mom) growth of 0.4% in May. This was double the consensus expectation for growth of 0.2%. At face value, there is no urgency arising from recent UK macroeconomic data to encourage the Bank of England to ease monetary policy. Elevated wage growth and services inflation also suggest there could be a further delay to long-anticipated rate cuts this calendar year. However, the bigger picture is that UK growth has been weak for some time; despite a pick-up in activity this year, the economy remains well below its pre-pandemic trend, in part due to Brexit.