By Suban Abdulla and David Milliken
LONDON (Reuters) -Britain’s economic system grew by essentially the most in practically in three years within the first quarter of 2024, ending the shallow recession it entered within the second half of final 12 months and delivering a lift to Prime Minister Rishi Sunak forward of an election.
The Workplace for Nationwide Statistics mentioned gross home product expanded by 0.6% within the three months to March, the strongest progress because the fourth quarter of 2021 when it rose by 1.5%.
The primary-quarter progress exceeded all forecasts in a Reuters ballot of 39 economists which had pointed to a 0.4% growth of gross home product within the January-to-March interval, after GDP shrank by 0.3% within the ultimate quarter of 2023.
Friday’s information was welcomed by Sunak who mentioned the economic system had “turned a nook”, though the opposition Labour Get together, which has a big lead in opinion polls, accused Sunak and finance minister Jeremy Hunt of being out of contact.
“There isn’t a doubt it has been a tough few years, however as we speak’s progress figures are proof that the economic system is returning to full well being for the primary time because the pandemic,” Hunt mentioned.
However the opposition Labour Get together rejected these claims.
“That is no time for Conservative ministers to be doing a victory lap and telling the British folks that they’ve by no means had it so good,” mentioned Labour’s Rachel Reeves, who hopes to succeed Hunt as finance minister.
The Financial institution of England, which held rates of interest at a 16-year excessive on Thursday, forecast quarterly progress of 0.4% for the primary quarter of this 12 months and a smaller 0.2% rise for the second quarter.
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Sterling strengthened in opposition to the U.S. greenback after Friday’s ONS figures have been launched.
TURNING A CORNER?
On a month-to-month foundation, the economic system grew by 0.4% in March, sooner than the 0.1% progress forecast by economists in a Reuters ballot, reflecting energy in retail, public transport, haulage and well being – partly resulting from fewer public-sector strikes.
Automotive manufacturing additionally carried out effectively, offset by continued weak point in development, the ONS mentioned.
Friday’s information additionally confirmed that GDP in March was 0.7% increased than a 12 months earlier, and above all economists’ expectations of a 0.3% rise.
Nonetheless, Britain has nonetheless had one of many slowest recoveries from the results of the coronavirus pandemic.
On the finish of the primary quarter of 2024, the nation’s economic system was simply 1.7% greater than its degree in late 2019, earlier than the pandemic, with solely Germany among the many G7 faring worse.
“Regardless of the higher near-term outlook, the development in GDP progress appears to be like more likely to be constrained by the continuing weak point in productiveness progress in addition to lowered scope to extend employment ranges,” Yael Selfin, chief economist at KPMG UK, mentioned.
GDP per head rose for the primary time in two years within the first quarter, up 0.4%, however was 0.7% decrease than a 12 months earlier, highlighting the continuing squeeze on dwelling requirements and Britain’s battle to spice up productiveness.
“In per capita phrases, it may very well be mentioned that UK households have seen little significant enchancment in dwelling requirements within the final two years,” Gora Suri, economist at PwC, mentioned.
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