The UK economy has managed to avoid a recession by growing 0.6% in the first quarter of the year, based on data from the Office for National Statistics. This growth exceeded expectations, with economists previously forecasting a 0.4% improvement. The growth comes after two consecutive quarters of decline at the end of 2023, which technically constituted a recession.
Chancellor Jeremy Hunt commented on the GDP figures, stating that despite the challenges of recent years, the economy is showing signs of recovery since the pandemic. He highlighted positive indicators such as faster wage growth compared to inflation, falling energy prices, and tax cuts benefiting the average worker.
The growth was driven by improvements in both the services and production sectors, which expanded by 0.7% and 0.8% respectively. Notably, the human health and social services sector, administrative and support services, as well as wholesale and retail firms contributed to the positive performance.
While construction output declined by 0.4% in March, it was a smaller decrease compared to the previous month. ONS director Liz McKeown noted the return to positive growth in the UK economy after two quarters of contraction, highlighting broad-based strength across service industries, with sectors like retail, public transport, health, and car manufacturing performing well.
In response to the economic data, Labour’s shadow chancellor Rachel Reeves cautioned against premature celebrations, emphasizing that there is still work to be done to fully recover from the impact of the pandemic. She emphasized that the economy is still smaller per person than when Rishi Sunak assumed office as Prime Minister.