The most recent report from the Office for National Statistics (ONS) has revealed a robust resurgence of the UK economy, emerging from a period of recession with an unexpectedly rapid growth of 0.6% in the first quarter of 2024.
Following two consecutive quarters of decline in the latter part of 2023, the country’s economy has exhibited clear signs of recovery, surpassing the expectations of many economists who had projected a 0.4% improvement for the latest quarter.
Liz McKeown, Director of Economic Statistics at ONS, attributed this positive growth to the strong performance of the service industries, particularly in retail, public transport, haulage, and health, alongside a commendable showing by car manufacturers. However, these gains were somewhat offset by another weak quarter for the construction sector.
This 0.6% growth marks the most substantial quarterly performance since the fourth quarter of 2021, driven primarily by the services and production sectors, which both saw a growth of 0.7% and 0.8% respectively.
Further bolstering this positive trend, ONS confirmed a 0.4% economic growth in March, largely attributed to the thriving service industry, particularly in the human health and social services sector, administrative and support services, as well as wholesale and retail firms. However, there was a slight downturn in construction output, with a 0.4% drop in March. Nevertheless, this reduction marks a significant improvement from the 2% fall in February.
Chancellor Jeremy Hunt expressed optimism about the UK’s economic recovery, citing the growth figures as evidence of the economy returning to full health for the first time since the pandemic. He added that the UK is on track for strong growth in the coming years, with wages growing faster than inflation and having the best outlook among European G7 countries.
On the contrary, Labour’s shadow chancellor, Rachel Reeves, cautioned against premature celebrations, highlighting that the economy is still £300 smaller per person than when Rishi Sunak became Prime Minister.
Amid these divergent viewpoints, the recent ONS report indicating the UK economy’s exit from recession with a 0.6% growth in the latest quarter offers a glimmer of hope for the country’s economic future. The strong performance of the service and production sectors and the overall positive trajectory suggest that the UK economy is on its way to recovery and growth.