First quarter GDP data is just out, and the the UK economy is definitely winding down. On an annualized basis, the economy grew by around 1.6 percent, which is the slowest rate in about 3 years.
Where is the drag coming from - the financial services sector, which are now rapidly slowing. The days of 5 percent growth are over the banks and building societies. No housing bubble means now growth.
While the economy is definitely on the slide, it is doubtful whether the slowdown is sufficient to put much downward pressure on inflation. The labour market remains tight, sterling has depreciated, and key commodity prices, such as food and fuel, are exploding. With strong inflationary pressures piling up, it is no time to be thinking of interest rate cuts.
It is all adding up to seventies-like revival of stagflation.