UK Economy Exits Recession with Strong Q1 Growth, Boosted by Services and Automotive Sectors

Following two consecutive quarters of contraction, the UK economy has emerged from recession, thanks to a stronger-than-anticipated growth of 0.6% during the first quarter of 2024, as revealed by the Office for National Statistics (ONS). This development puts an end to the technically defined recession announced in February. Liz McKeown, Director of Economic Statistics at ONS, highlighted that various service sectors, including retail, transportation, haulage, and healthcare, recorded significant gains during the period. Additionally, the automotive industry performed exceptionally well. Services output witnessed a rise of around 0.7%, while production output saw a corresponding surge of 0.8%. Conversely, construction witnessed a fall of approximately 0.9%. Chancellor Jeremy Hunt expressed optimism about the country’s economic situation, stating that the economy is regaining momentum since the COVID-19 crisis. He further asserted that the UK enjoys the most promising forecast among the European G7 nations over the following six years, with wage growth surpassing inflation, declining energy costs, and a £900 tax cut for average workers due to hit their bank accounts. These developments came after the Bank of England decided to maintain interest rates at 5.25% on Thursday. Nevertheless, the Governor, Andrew Bailey, signaled that interest rate reductions might be on the horizon, possibly sooner than anticipated by the market. Furthermore, fresh data revealed that GDP grew by 0.4% in March, surpassing forecasters’ predictions of merely 0.1% growth.