UK Economy Bounces Back: Q1 GDP Growth Signals End of Recession

The UK economy has officially exited recession, with a 0.6% growth in GDP from January to March. This marks a significant turnaround from the previous two quarters, which saw a decline of 0.3% and 0.1%, respectively.

UK economy growth

According to Liz McKeown, ONS director of economic statistics, “After two quarters of contraction, the UK economy returned to positive growth in the first three months of this year.” This growth was driven by a broad-based strength across service industries, including retail, public transport, and haulage, as well as a strong performance from car manufacturers.

“There was broad-based strength across the service industries with retail, public transport and haulage, and health all performing well. Car manufacturers also had a good quarter.” - Liz McKeown, ONS director of economic statistics

The construction sector, however, remains a weak spot, with a decline of 0.9%. This is likely due to the ongoing impact of higher interest rates and the pandemic on the commercial sector.

Construction sector decline

Nicholas Hyett, investment manager at Wealth Club, notes that the economy is growing faster than expected, with a strong performance in March led by services, wholesalers, and hospitality. “Perhaps most reassuring is the broad base of growth – with positive developments across everything from retail to manufacturing,” he says.

“An upgrade to February’s growth estimate and strong performance in March means the 2023 recession is rapidly receding in the rear view mirror – ending almost as soon as it had started.” - Nicholas Hyett, Wealth Club

The Bank of England will likely be pleased with these numbers, and a rate cut on Thursday may be premature.

UK economy growth

The UK’s economic growth is a welcome sign, and with the economy looking healthy, it’s time to focus on sustaining this growth and building a strong foundation for the future.