March 13, 2024, 07:17 GMT
Updated 12 minutes ago
image source, Getty Images
Britain's economy rebounded in January, raising hopes that the country could be on its way out of recession.
Official figures showed the economy grew 0.2%, boosted by in-store and online sales and increased construction.
The Office for National Statistics (ONS) said the services sector led the improvement.
This is an early estimate, but it shows how the UK is doing, having entered a recession at the end of 2023.
Some experts said this could indicate that the economy may be turning a corner after slipping into recession late last year.
The services sector, which includes hairdressers and hospitality, grew 0.2% in January. It was the biggest contributor to the overall monthly increase, supported by strong performance on the high street and spending in supermarkets.
This represents an improvement on the 0.1% decline in production in December as retailers failed to attract shoppers who had opted to spend their money on earlier sales in the run-up to Christmas.
Liz McKeown, director of economic statistics at the ONS, said: “The economy recovered in January with strong growth in retail and wholesale trade.”
“The construction sector also performed well, with the construction industry having a good month after being subdued for much of last year.”
However, these areas of growth were offset by declines in television and film production, legal services and the pharmaceutical industry, which can be quite volatile.
However, the manufacturing sector, which includes manufacturing, fell 0.2% in the three months to the end of January and services remained stagnant.
Ms McKeown said: “Over the last three months overall the economy has contracted slightly.”
Less people spending, doctors' strikes and a decline in school attendance dragged the UK into recession at the end of 2023.
The economy shrank 0.3% between October and December, after contracting between July and September. The UK is in recession if it does not experience growth for two consecutive quarters.
Growing the economy was one of the top five promises made by Prime Minister Rishi Sunak last year as consumers and businesses came under pressure from higher prices and interest rates.
Most economists, politicians, and businesses want to see a steady increase in gross domestic product (GDP) because this typically means people spending more, additional jobs being created, more taxes being paid, and workers getting better raises.
Reacting to the latest figures, Chancellor Jeremy Hunt said: “While the last few years have been tough, today's figures show we are making progress in economic growth – part of which makes it possible to cut National Insurance contributions by £900 in the coming years. ” Year.
“But if we want the growth rate to continue to rise, we need to make work pay, which means ending the injustice of double taxation of work.”
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, warned that February could see a more subdued performance as wet weather may keep shoppers indoors.
He added that pressure from higher interest rates and ongoing labor shortages could cause the economic recovery to be “weaker” than the government's financial watchdog, the Office for Budget Responsibility (OBR), predicts.
Coinciding with what could be the Chancellor's final Budget before the general election, the OBR announced that it expects the UK economy to grow by 0.8% this year, with inflation expected to fall below the Bank of England's target by the end of June will fall by 2%.
However, the ongoing impact of higher interest rates aimed at curbing spending and driving down prices, coupled with weak investment by businesses and the public sector, could slow the economy in the longer term, Yael Selfin, chief economist at KPMG UK, said.
While other countries' economies have also struggled with energy price shocks and supply chain delays due to the cost-pumping pandemic, growth in the UK has been stagnant for some time.
Speaking to the `'s Today program on Wednesday, the ONS's Liz McKeown said her survey of 40,000 businesses showed that more than one in five actually expected sales to rise in March.
While she said companies reported to them a “mixed picture” for the future, “there are some signs of optimism.”
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