Berenberg analysts say the Bank of England is likely to be more reluctant to
raise rates than the ECB, citing a weaker UK labor market versus the euro area
and a reduced inflationary role from services. They note UK policy was already
tighter than the euro area before the energy shock and fiscal settings remain
constrained. After a strong start to the year, ongoing Iran-related headwinds
are slowing activity. Post-COVID shifts in seasonal consumption have created a
statistical illusion that overstates Q1; Berenberg forecasts summer stagnation,
with QoQ GDP growth of 0% in Q2 and Q3.
