London Stocks Climb After Strong UK Economic Growth Figures

UK equities moved higher on Thursday as stronger-than-expected first-quarter economic growth provided some relief to investors amid rising political uncertainty.

The FTSE 100 closed 0.46% higher, while the FTSE 250 gained 1.33%.

Official data showed the British economy expanded unexpectedly in March, suggesting activity was more resilient than many economists had anticipated following a weak end to the previous year.

However, analysts cautioned that the figures may have been boosted by temporary factors, including stockpiling linked to supply chain disruption caused by tensions in the Middle East.

Rob Wood of Pantheon Macroeconomics warned that the underlying trend remains uncertain, while George Brown at Schroders said the UK economy has repeatedly shown strong starts to the year before momentum fades later on.

Economists also pointed to ongoing distortions in post-pandemic spending patterns, which may still be affecting GDP measurements.

The stronger growth data has reinforced expectations that the Bank of England will maintain a cautious stance on monetary policy. Markets are currently pricing in at least two interest rate increases this year, although analysts believe the central bank may stop short of fully matching those expectations.

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