Prime Minister Rishi Sunak received a positive news today as the UK economy grew by 0.6% in the first quarter of the year, marking a turnaround from the recession at the end of 2023. This unexpected win came after the Office for National Statistics reported a growth of 0.4% in March and 0.2% in February.
Gross Domestic Product (GDP) outperformed economists’ expectations, who had predicted a growth of just 0.4%, making it the most significant economic growth since the end of the Covid pandemic. The UK had faced two consecutive quarters of economic contraction, leading to a brief recession, but the recent growth is a positive sign for the economy.
Despite this growth, the overall economic outlook for the UK is still challenging. The OECD has lowered its forecast for the British GDP this year, making the UK the second-worst performer among the G7 nations. They have also reduced their predictions for 2025 growth and anticipate the UK to become the slowest-growing economy within the G7.
Furthermore, the Bank of England maintained high-interest rates at 5.25% following persistent inflation rates. Chancellor Jeremy Hunt acknowledged the difficulties of the past few years but expressed optimism about the economy returning to full health for the first time since the pandemic. He highlighted positive factors such as growing wages, falling energy prices, and tax cuts benefiting the average worker.
Overall, while the recent economic growth is a welcome development for the UK, challenges persist in terms of overall growth and positioning within the G7 nations.