UK Economic Momentum Faces Challenges Amid Middle East Tensions

Ruth Gregory from Capital Economics highlighted in a report that the UK's monetary and credit data for January indicates a strengthening economy at the start of the year. According to Jin10, despite this positive trend, developments in the Middle East may hinder sustained momentum. Gregory noted that consumer credit increased by £1.8 billion in January, surpassing market expectations, while cash growth in household bank accounts slowed compared to December, suggesting more cautious consumer spending. Gregory warned that the inflationary impact of Middle East events poses a growing risk, potentially limiting interest rate cuts and slowing economic growth this year. She added that weak employment growth and slowing wage increases could restrict consumer spending growth to below 0.8% by 2026.