UK economy grows 0.1% in the first quarter

The UK economic system eked out development within the first quarter of the yr, accelerating at a modest tempo to make sure that the economic system is just not at quick danger of recession.

Quarterly development between January and March rose by 0.1 per cent in contrast with the identical interval final yr, consistent with economists’ forecasts and matching weak development figures recorded on the finish of 2022.

The UK’s development outlook has brightened in latest months after a pointy decline in world power costs decreased the probabilities of a recession hitting this yr. A recession is outlined as two consecutive quarters of falling development.

The Workplace for Nationwide Statistics (ONS) stated that development in March had declined by 0.3 per cent, following no development in February and a 0.5 per cent enlargement in January. Greater quarterly output was the results of a 0.5 per cent development within the manufacturing sector, a 0.1 per cent rise in providers and a 0.7 per cent acceleration within the development business.

The UK’s total financial efficiency was hit by nationwide industrial motion by civil servants demanding higher pay. Output in schooling, well being and public administration all declined within the first three months of the yr because of strikes.

March’s outright fall in development might be attributable to the strikes, the ONS stated, highlighting its enterprise surveys, which have discovered that one in ten companies throughout the nation had been affected by industrial motion.

The figures come a day after the Financial institution of England revised up its development outlook by the best margin on file, wiping out its earlier predictions that the economic system would succumb this yr to the longest recession in half a century.

The Financial institution’s improve was the results of a 40 per cent decline in world gasoline costs this yr, coupled with authorities assist for family power payments and a better-than-expected world economic system serving to companies. The Financial institution now expects annual development to develop by 0.25 per cent this yr, in contrast with an earlier forecast of a 0.5 per cent contraction.

Economists count on that development within the second quarter will stay anaemic as a result of the continuation of strike motion and a further financial institution vacation to mark the King’s coronation will weigh on output.

Jeremy Hunt, the chancellor, stated: “It’s excellent news that the economic system is rising however to achieve the federal government’s development precedence we have to keep centered on aggressive taxes, labour provide and productiveness.

“The Financial institution of England governor confirmed yesterday that the Price range has made an necessary begin however we are going to maintain going till the job is finished and we’ve got the excessive wage, excessive development economic system we want.”

Samual Tombs, chief UK economist at Pantheon Macroeconomics, stated the UK stays the one G7 nation wherein the primary quarterly measure of GDP has not recovered to its pre-Covid peak but. “This mainly displays weak point in households’ actual spending, which was 2.3 per cent beneath its This autumn 2019 degree. However not less than the magnitude of the underperformance is just not growing relative to different nations in Europe, which have confronted a equally monumental power value shock,” he stated.

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