The UK is no longer in recession, with the economy growing at its fastest pace for two years.
UK GDP grew by 0.6% in January to March 2024, according to figures from the Office for National Statistics – a rate of growth that was stronger than expected and followed two consecutive quarters where economic output had shrunk.
The biggest contributions to economic growth came from sectors including transport and storage, health and social care, retail, and scientific and technical activities.
UK exits recession
Less than a third to award above-inflation pay rises in 2024
Pay awards drop slightly, but edge over inflation
Wages will not return to pre-financial crisis level until 2026
Chancellor Jeremy Hunt said the figures were “encouraging” and “an indication that we’re on the right track”.
“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 said.
However, Labour’s shadow chancellor Rachel Reeves said it was not the time for ministers “to be doing a victory lap” as prices and mortgage costs were still high.
The Liberal Democrats’ Treasury spokesperson Sarah Olney said: “The only way to kickstart the economy is to boot this Conservative government out of office. It’s time for a general election.”
Ben Jones, lead economist at the CBI, said organisations wanted to see action that would boost investment and cut costs, such as “extending full expensing to leased and rented assets, and a business tax roadmap to give firms the certainty and confidence they need to plan ahead and invest in a vibrant UK economy”.
He said: “Back-to-back increases in output over the first months of this year suggest the UK is now on the road to recovery. With falling inflation boosting households’ spending power, as well as opening the way for a reduction in interest rates in the months ahead, the economy should be able to sustain some momentum through the year.
“But a consumer-led recovery could prove short-lived without more determined action to tackle the long-standing problem of weak productivity growth, which ultimately sets the UK’s economic speed limit.”
Dr Roger Barker, director of policy at the Institute of Directors, said the figures showed the economy had started to move forward, but it was too early to say it had recovered.
“Although there are welcome signs of green shoots, any recovery is still at an early stage and it is likely to be fragile. As a result, there is still a compelling case for the Bank of England to cut interest rates at its next meeting on 20 June,” he said.
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The Bank of England held interest rates at 5.25% this week, with boss Andrew Bailey stating that there had been “encouraging news” on inflation, currently at 3.2%, but said the Bank needed “more evidence” it would stay low before cutting rates.
