Kevin Brown, Savings Specialist comments on today's UK GDP figure

“Despite some encouraging data recently, today’s flat GDP reading is disappointing and shows the UK economy is struggling to build momentum in the face of numerous headwinds.

“Recent reports of rising output and business confidence had perhaps raised hopes that the economy was starting to turn the corner. Instead, the data suggest that growth remains patchy and inconsistent.

“A major economic drag remains consumer confidence – or the lack thereof – with households grappling with elevated interest rates and nearly five years of higher inflation. This is a real concern for an economy that relies so heavily on consumption.

“Unfortunately, the outlook has also darkened due to the conflict in the Middle East, which has already sent shockwaves through financial markets. Swap rates – which determine the cost of fixed-rate mortgages – have surged since the outbreak, prompting lenders to pull products and reprice deals higher.

“Oil prices have also been volatile, pushing up costs at the petrol pumps. If energy prices stay elevated, it raises the risk that the Bank of England leaves interest rates higher for longer, which would be a double blow for both businesses and households.

“Higher rates would be welcome news for those with cash savings, but any gains made on savings interest would likely be offset by higher inflation. It would also result in further pressure on households and businesses, which would weigh on growth.

“Much will depend on how the situation in Iran unfolds, but if tensions persist it could quickly turn into a particularly nasty and unwanted headwind for the UK economy.”