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The UK economy has rebounded from a short-lived recession, posting a growth of 0.6% in the first quarter of 2024, marking its fastest pace of expansion in two years.
This growth surpassed economists’ expectations of 0.4% and reversed the 0.3% contraction observed in the final quarter of 2023.
This positive growth trajectory, the quickest since the first quarter of 2022, can be attributed to several factors, including declining inflation rates, increased household disposable incomes, and growing consumer and business confidence. Notably, the UK’s dominant services sector expanded by 0.7%, while the manufacturing industry saw a notable recovery, with output accelerating by 0.8%.
However, the construction sector experienced a contraction of 0.9%, representing its weakest performance. Despite this, trade, household spending, and government spending all saw increases during the period, although investment declined.
Speaking about the figures, Liz McKeown, director of economic statistics at the ONS, said“After two quarters of contraction, the UK economy returned to positive growth in the first three months of this year,”
McKeown added: “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. These were only a little offset by another weak quarter for construction.”
These figures come in the wake of the Bank of England’s indication of a potential interest rate cut in June, signaling a shift away from the aggressive monetary tightening observed since late 2021. Additionally, the Bank upgraded its growth forecasts, projecting a 0.8% expansion for the year and 1% growth in 2025.