The surprisingly strong 0.5% m/m in February (consensus forecast 0.1%, Capital Economics 0.2%) and the upward revision to January GDP from 0.0% m/m to +0.1% m/m suggests the economy went into the energy price shock on a stronger footing than we previously thought. But March’s activity PMIs suggest the war in Iran has already all-but extinguished growth. And in our baseline scenario, we think GDP growth will slow from 1.4% in 2025, to just 0.7% this year.
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