The UK economy has shown signs of improvement in the first quarter of the year, with a growth rate of 0.6%, exceeding expectations by 0.2%. This growth comes after two consecutive quarters of decline at the end of 2023, which technically constituted a recession.
Labour’s shadow chancellor Rachel Reeves warned against premature celebrations, emphasizing that there is still work to be done to fully recover from the impact of the pandemic. She pointed out that despite recent positive indicators such as faster wage growth compared to inflation, falling energy prices, and tax cuts benefiting the average worker, the economy is still smaller per person than when Rishi Sunak assumed office as Prime Minister.
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. However, construction output declined by 0.4% in March, which was a smaller decrease compared to the previous month.
ONS director Liz McKeown noted that this return to positive growth in the UK economy after two quarters of contraction highlights broad-based strength across service industries, with sectors like retail, public transport, health, and car manufacturing performing well. Chancellor Jeremy Hunt also commented on the GDP figures stating that despite challenges of recent years, it shows signs of recovery since the pandemic highlighting positive indicators such as faster wage growth compared to inflation and falling energy prices but also tax cuts benefiting average worker
