UK Recovers From Recession With 0.6% GDP Growth

By Thea Felicity

May 10, 2024 05:00 PM EDT

UK Treasury

(Photo : Chris Lawton via Unsplash)
The UK economy has officially exited the recession, with recent data showing a better-than-anticipated 0.6% growth in Gross Domestic Product between January and March, according to Sky News,

Prime Minister Rishi Sunak hailed this as a major turning point, underlining the nation's "real momentum." 

The declaration of the recession in February came after the Office of the National Statistics reported a 0.3% contraction in GDP between October and December, following a 0.1% decrease in the preceding quarter. 

Factors contributing to this downturn included reduced consumer spending power amid high inflation and energy costs, compounded by adverse weather conditions previously reported by VCPost.

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Is Recession in UK Over?

March's figures exceeded expectations, with GDP growing by 0.4%, higher than the forecasted 0.1%, while ONS revised February's GDP growth upward from 0.1% to 0.2%. In return, economists noted that the almost 0.6% growth is near what was considered normal before the pandemic, indicating a return to normalcy.

Chancellor Jeremy Hunt described the recent data as "encouraging," suggesting that the economy is "returning to full health." 

However, opposition parties, including Labour and the Liberal Democrats, urge restraint in celebrating these figures, stating that the economy remains smaller per person compared to previous years.  While sectors like retail, public transport, and health demonstrated strength, construction experienced another weak quarter. 

Currently, the Bank of England has chosen to keep interest rates steady at 5.25%. This decision suggests a degree of optimism about the future direction of the economy, with forecasts indicating expectations for improved economic growth, reduced unemployment, and lower inflation rates compared to earlier predictions. 

However, it also acknowledges that there are still uncertainties and challenges present, indicating a need for caution and careful monitoring of economic conditions.

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