Bank of England overestimates UK economic weakness — Bloomberg

Bloomberg reports that the Bank of England (BOE) may be underestimating the UK’s economic strength. The central bank favors pessimistic business surveys, such as the business activity index, over stronger official GDP data. This approach risks repeating its 2016 mistake, when the regulator eased monetary policy based on flawed survey data, despite the economy actually growing by 1.9% that year.

BOE Governor Andrew Bailey has argued that GDP growth figures are too volatile, while surveys give him greater confidence. However, Bloomberg experts highlight a discrepancy: the UK’s economic recovery in Q1 2025 reached 0.7%, whereas business activity indexes indicated stagnation. Analysts note that surveys often reflect negative sentiment during uncertain times rather than true economic performance.

This inconsistency complicates future decisions on key rate cuts. The BOE must now balance recent inflationary pressures against concerns over GDP growth, Bloomberg adds.