After two quarters of falling figures, the British economy surprisingly grew again for the first time since the beginning of the year. According to initial estimates from the ONS statistics office, gross domestic product increased by 0.6 percent from January to March compared to the previous quarter. Analysts had on average only expected an increase of 0.4 percent. Before that, the British economy had contracted slightly for two quarters in a row and thus slipped into a so-called technical recession.
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“Service industries were strong across the board, with retail, public transport, transport and healthcare performing well,” said Statistics Director Liz McKeown. The auto industry also had a good quarter. Foreign trade increased, as did spending by private households and the state. The construction industry, however, recorded a decline.
Economic output is now higher than before the outbreak of the corona pandemic
Economic output is now 1.7 percent higher than in the fourth quarter of 2019 before the outbreak of the corona pandemic. According to Finance Minister Jeremy Hunt, these figures are evidence that the British economy has overcome the impact and consequences. “There’s no doubt it’s been a difficult few years,” he said. “But today’s growth numbers are evidence that the economy is fully healthy again for the first time since the pandemic.”
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The inflation rate also fell: at 3.2 percent in March, it reached its lowest level in two and a half years. The Bank of England is aiming for a figure of two percent. “We expect it to be close to the target in the coming months,” said Andrew Bailey, head of the British central bank. It still left its key interest rate at 5.25 percent. In view of the declining inflation, the central bank chief believes that a first interest rate cut in June is possible. It would be the first cut in the key interest rate in more than four years.
The Bank of England has raised its economic growth forecast for the rest of the year. According to this, the gross domestic product will rise by 0.5 percent in 2024, twice as much as was assumed in February.
After two quarters of falling figures, the British economy surprisingly grew again for the first time since the beginning of the year. According to initial estimates from the ONS statistics office, gross domestic product increased by 0.6 percent from January to March compared to the previous quarter. Analysts had on average only expected an increase of 0.4 percent. Before that, the British economy had contracted slightly for two quarters in a row and thus slipped into a so-called technical recession.
“Service industries were strong across the board, with retail, public transport, transport and healthcare performing well,” said Statistics Director Liz McKeown. The auto industry also had a good quarter. Foreign trade increased, as did spending by private households and the state. The construction industry, however, recorded a decline.