UK economy grows 0.1% in the first quarter

UK economy grows 0.1% in the first quarter

The UK financial system eked out development within the first quarter of the yr, accelerating at a modest tempo to make sure that the financial system will not be at rapid 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 current months after a pointy decline in international power costs lowered the possibilities 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 growth in January. Larger quarterly output was the results of a 0.5 per cent development within the manufacturing sector, a 0.1 per cent rise in companies and a 0.7 per cent acceleration within the development trade.

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

March’s outright fall in development may very well be attributable to the strikes, the ONS stated, highlighting its enterprise surveys, which have discovered that one in ten companies throughout the nation have 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 document, wiping out its earlier predictions that the financial 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 international gasoline costs this yr, coupled with authorities help for family power payments and a better-than-expected international financial system serving to companies. The Financial institution now expects annual development to broaden by 0.25 per cent this yr, in contrast with an earlier forecast of a 0.5 per cent contraction.

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

Jeremy Hunt, the chancellor, stated: “It’s excellent news that the financial system is rising however to succeed in 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 Funds has made an essential begin however we’ll preserve going till the job is completed and we have now the excessive wage, excessive development financial system we want.”

Samual Tombs, chief UK economist at Pantheon Macroeconomics, stated the UK stays the one G7 nation through which 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 stage. However a minimum of the magnitude of the underperformance will not be growing relative to different nations in Europe, which have confronted a equally monumental power worth shock,” he stated.

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