Recent economic data from the UK has prompted a somewhat cautious analysis from the professionals at KPMG. The professional services firm points to persistent challenges stemming from elevated energy prices that continue to hinder a rebound in household consumption. As families brace for notable rises in their utility bills starting next month, and with energy markets still unstable and potential for additional spikes later in the year, spending patterns are shifting.
Many consumers are planning to rein in discretionary purchases and bolster their savings, a move that is expected to further restrain overall economic momentum.
Yael Selfin, Vice Chair and Chief Economist at KPMG in the UK, emphasized these dynamics in her assessment of the latest figures.
She noted that while the broader three-month period ending in April showed positive expansion, the monthly downturn observed in April serves as a stronger signal for near-term trajectories.
KPMG anticipates a deceleration in UK GDP growth during the second quarter as these pressures mount.
On the corporate side, companies are grappling with sustained high costs for energy and raw materials.
Unlike conditions in 2022, however, weaker consumer demand is making it difficult for businesses to transfer these increased expenses to buyers.
This squeeze on profitability margins may prompt many firms to curtail their capital expenditure plans.
Such decisions are compounded by elevated interest rates on loans and ongoing global geopolitical tensions, creating a more challenging environment for investment.
This outlook from KPMG now overall reflects a broader picture of an economy navigating multiple constraints.
The lingering effects of the energy crisis are not only affecting immediate spending but also shaping longer-term confidence among both households and enterprises.
With borrowing costs remaining high, businesses face a delicate balance between managing operational expenses and planning for future growth.
Geopolitical risks add another layer of uncertainty, potentially delaying recovery efforts across key sectors.
Analysts suggest that the combination of these factors could lead to a more subdued performance in the coming months, even as the UK seeks pathways toward sustained expansion.
Policymakers and industry professionals will likely monitor developments closely, particularly around energy supply stability and inflation trends, to inform strategic responses.
For now, the data underscores the need for resilience and adaptability in the face of evolving economic conditions.
KPMG, an advisor known for its sector expertise and long-term approaches, continues to support organizations in addressing such complexities. The firm, which recently expanded through a merger with its Swiss counterpart in late 2024 to form the KPMG UK / Swiss Group, remains focused on helping clients unlock various opportunities amid ongoing challenges.
