After entering a shallow recession in the quarter of 2023, the British economy is sid to have returned to growth which defines a relief to PM Sunak ahead of the election expected this year.
With a 0.2% GDP growth on month-on-month which boosted by a rebound in retailing and house-building – after a fall of 0.1% in December, in line with economists’ expectations.
According to Liz McKeown, a director at the Office for National Statistics, she said, “The economy picked up in January with strong growth in retail and wholesaling, Construction also performed well with house-builders having a good month, having been subdued for much of the last year.”
It is however too early to ascertain if the economy is no longer in recession. By the 0.1% shrinkage of the GDP in Q3, 2023 and 0.3% of the same statistics in Q4, 2023, those figures met the technical measure for recession widely used in Europe.
Wednesday’s figures showed that construction output – which is often volatile – jumped by 1.1% in January, its biggest monthly rise since June and led by a 2.6% rise in private-sector house-building, which had been depressed by high interest rates.
According to Ruth Gregory, deputy chief UK economist at Capital Economics, she said, “A 0.1% quarter-on-quarter rise in Q1 would match the Bank’s forecast and with domestic inflationary pressures fading, we think a rate cut this summer – perhaps in June – is still the most likely outcome.”