Home News UK emerges from recession with faster-than-expected economic growth

UK emerges from recession with faster-than-expected economic growth

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Economic growth in the first three months of this year was driven by the services sector, which expanded for the first time in a year, the statistics agency said. Transportation services, legal services and scientific research all grew strongly, but services such as hotels and restaurants declined slightly and the construction industry shrank sharply.

GDP per capita increased by 0.4% in the first quarter after declining for seven consecutive quarters.

Still, Britain’s economic data is “incredibly mixed,” said Terra Alas, an economist at McKinsey’s UK and Ireland office who leads research and economics and is a former civil servant. Some industries like professional services and technology are doing well, but others like hospitality have been struggling, she said.

Ms Aras added that consumers’ financial situation was “much murkier”. Market sentiment was negative, with retail sales falling by some measures. But consumer spending remains a key aspect of the country’s economic resilience. Adjusted for inflation, household spending rose 0.2% after two quarters of declines, the statistics agency said.

Some of this can be explained by the labor market. Despite interest rates at a 16-year high, investment slowing and bankruptcies rising, the unemployment rate rose only slightly, to 4.2% in February, up from a recent low of 3.8%.

On Thursday, the National Institute of Economic and Social Research said it expected economic data on Friday to show that the recession is “a thing of the past” but warned that the long-term outlook for the economy was weak. Economists at the institute forecast annual growth of about 1% over the medium term.

this bank of england It said that the impact of rising interest rates and restricted public spending will put pressure on the economy, which is expected to grow by 0.5% this year. While policymakers say a rate cut is imminent, they plan to take a cautious approach, suggesting rates will fall slowly.

“There’s no doubt it’s been a tough few years, but today’s growth data proves that the economy is back to full health for the first time since the pandemic,” Chancellor of the Exchequer Jeremy Hunt said in a statement on Friday.

With a general election due in the next eight months, the economy is a top priority, with both major parties vowing to stimulate economic growth. Rachel Reeves of the Opposition Labor Party, Accused the ruling Conservative Party of “manipulating” the British people About economic improvement.

In a speech this week, Reeves said claims that the UK economy was out of the woods “do not correspond to economic reality” as many people told her they were struggling to pay bills, high rents or mortgages.

For many families, 2024 will also feel like they are emerging from a long-running cost-of-living crisis. While prices remain higher than pre-pandemic levels and are expected to remain that way, consumers’ budgets have eased. Average incomes are growing faster than inflation, household energy bills are falling, The government has cut some taxes. The National Institute of Economic and Social Research said this week that average living standards, measured by household disposable income, will rise 6% this year compared with last year.

But the benefits are not shared by everyone. The institute said living standards for households in the lowest income groups will fall further as rents rise significantly.

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