The UK has powered its way out of last year’s recession, new figures show, after the economy grew much faster than expected in March.
According to figures from the Office for National Statistics (ONS), the UK economy grew 0.4 per cent on a monthly basis, bringing its total growth in the first quarter to 0.6 per cent.
Economists had expected the economy to grow just 0.1 per cent in March, which would have brought the quarterly growth rate to 0.4 per cent after growth in January and February.
The figures mean the recession recorded over the second half of last year, during which GDP shrunk by a cumulative 0.4 per cent, has come to an end.
“After two quarters of contraction, the UK economy returned to positive growth in the first three months of this year,” ONS director of economic statistics, Liz McKeown said.
“There was broad-based strength across the service industries with retail, public transport and haulage, and health all performing well,” she continued.
Looking at March specifically, McKeown noted the economy grew “robustly” thanks to strong growth in the services sector. Wholesales, the health sector and hospitality performed particularly well.
Despite falling into recession last year, growth so far this year has exceeded expectations on the back of stronger consumer spending.
The combination of falling inflation and the prospect of lower interest rates has provided a healthy tailwind for household spending which many economists think will continue.
Economists think the UK will grow 0.4 per cent this year, although the Office for Budget Responsibility (OBR) expects a 0.8 per cent expansion. Last year the economy grew just 0.1 per cent.
The economy will be an important battleground ahead of this year’s general election. The Conservatives, trailing Labour by around 20 percentage points, hope that a steadily improving economy will improve their electoral prospects.
“Today’s growth figures are proof that the economy is returning to full health for the first time since the pandemic,” Chancellor of the Exchequer Jeremy Hunt said.
“We’re growing this year and have the best outlook among European G7 countries over the next six years, with wages growing faster than inflation, energy prices falling and tax cuts worth £900 to the average worker hitting bank accounts,” he continued.
However, earlier this week Rachel Reeves, the shadow chancellor, argued Sunak was “gaslighting” the public over the state of the economy.
