Britain's recession is officially over as economy grows faster than expected in first quarter
Jeremy Hunt visits a Morrisons store
Britain’s economy has returned to growth after one of its shortest recessions on record, official figures reveal today.
GDP advanced by a stronger than expected 0.6% in the first quarter after robust 0.4% growth in March in a boost to Rishi Sunak and Jeremy Hunt, according to data from the Office for National Statistics (ONS).
That means that the recession that lasted through the second half of last year is now officially over after growth of 0.3% in January and 0.2% in February. Recession is defined by economists as two consecutive quarters of falling output.
The figures suggest that the British economy may finally be gaining some momentum after years of slow growth.
Today’s announcement shows the key services sector – which accounts for 80% of output, growing at 0.7% between January and March, while the production sector, which includes manufacturing was 0.8% higher but construction fell 0.9%.
Crucially real GDP per head increased by 0.4% in the first quarter following seven consecutive quarters without positive growth.The figures come after the Bank of England yesterday once again left its benchmark interest rate at 5.25% although there are growing hopes in the City of a cut in June.
The Bank’s Monetary Policy Committee (MPC) slightly upgraded its forecasts for GDP growth in 2025 and said inflation will be below its 2% inflation target through 2026 and 2027.
Chancellor of the Exchequer Jeremy Hunt said: “There is no doubt it has been a difficult few years, but today’s growthfigures are proof that the economy is returning to full health for the firsttime since the pandemic. “We’re growing this year and have the best outlook among European G7 countriesover the next six years, with wages growing faster than inflation, energyprices falling and tax cuts worth £900 to the average worker hitting bankaccounts.”
Shadow Chancellor Rachel Reeves , said: “This is no time for Conservative ministers to be doing a victory lap and telling the British people that they have never had it so good. The economy is still £300smaller per person than when Rishi Sunak became Prime Minister.
“After14 years of economic chaos, working people are still worse off. Prices are still significantly higher in the shops, families are paying hundreds of pounds more on monthly mortgage bills, and the economy is forecast to grow by just one per cent next year.
“It’s time for change. Only Labour has a long-term plan to grow the economy, create jobs and make working people better off.”
Richard Carter, head of fixed interest research at City firm Quilter Cheviot, said: “With interest rate cuts seemingly pencilled in for the summer, the good news continues to flow for the UK as today’s data shows the UK is out of recession.
“The first quarter saw GDP grow by 0.6%, better than expected, as inflation has eased and the worst of the cost-of-living crisis isbehind us. The increase in GDP has primarily been driven by the UK’s strongservices sector, which it has come to rely on in recent years to help push theeconomy forward.
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