The UK is officially out of recession after figures showed the economy grew by 0.6% in the first three months of the year.
The Office for National Statistics said the period from January to the end of March marked a return to growth after a mild recession in the second half of 2023. It was a stronger performance than expected by economists, who forecast growth of 0.4% in the first quarter.
The downturn came to an end after an increase in activity across the services sector, which has flourished since the turn of the year as wages have outstripped inflation, easing the pressure on consumers.
However, forecasters expect the UK to grow slowly this year as high interest rates and last year’s inflation surge continue to take their toll on disposable incomes.
The Bank of England has predicted that a lack of momentum in the economy means gross domestic product will grow by only 0.5% this year. The Bank kept interest rates unchanged at 5.25% on Thursday but indicated it may begin cutting them from June.
The chancellor, Jeremy Hunt, said: “There is no doubt it has been a difficult few years, but today’s growth figures are proof that the economy is returning to full health for the first time since the pandemic.
“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.”
after newsletter promotion
More details soon …
