The Bank of England has cut interest rates to 0.25 percentage points, following the European Central Bank's lead. Despite a positive GDP growth of 0.5% in February, the UK's economic prospects appear fragile due to potential impacts from US tariffs and higher employment taxes, which may deter investment. Growth forecasts for the UK have been downgraded significantly, and consumer confidence has weakened, leading to decreased borrowing. Overall, while the economy shows signs of recovery, caution prevails within the consumer landscape, prompting the BoE's decision to lower rates to stimulate spending.
Given the risk of overheating appears to be next-to-zero in the UK, lower rates could in fact help to stimulate demand and spur growth in the economy.
Recent UK economic data was positive with 0.5% growth in GDP in February, but these are fragile green shoots that will need to be carefully nurtured.
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