A member of the public walks through heavy rain near the Bank of England in May 2023.
Dan Kitwood | Getty Images News | Getty Images
LONDON – The UK economy grew by 0.1% in the first quarter after an unexpected contraction in March, official figures showed on Friday.
Economists polled by Reuters had forecast identical growth figures for the first three months of the year, but expected stagnation in March, a decline of 0.3%.
The construction sector expanded by 0.7%, while the manufacturing performance increased by 0.5% in the first quarter, with services and production rising by 0.1%. On a monthly basis, services declined 0.5% in March, notably due to declines in wholesale and retail trade and motor repair.
The National Statistics Agency said there was no increase in real household spending, as incomes remained under pressure from higher prices.
Ruth Gregory, deputy chief economist for the UK at Capital Economics, said in a note that the quarterly data “suggest that lower real incomes and higher interest rates, as well as unusually wet weather, are dampening activity,” also citing Giving general strike action this year. he assessed that there was a decline Made for “gloomy reading” in government consumption and net trade.
,Still no recession, but it’s too soon to be completely clear with the full drag from higher interest rates yet,” Gregory said.
persistent inflation
UK growth has been muted so far this year, coming in at 0.4% in January and even In February, after the economy narrow escape A tech meltdown in 2022.
Inflation still more severe on UK than other major economies with March reading above 10%,
Bank of England on Thursday raised Interest rates have been reduced by 25 basis points to 4.5%, the twelfth consecutive increase in an effort to combat extremely high prices. More optimistically, the central bank said it does not expect Britain to enter recession this year, despite it having previously predicted longest recession,
The Bank of England forecasts that UK GDP will be flat in the first half of this year, rising by 0.9% by mid-2024 and 0.7% by mid-2025.
“This may be the biggest upgrade we’ve ever done,” said Andrew Bailey, governor of the BOE. Said CNBC on Thursday, defended the revision as the result of a changing picture from conditional data including financial markets, commodity prices and government policy.
“The level is still quite low, let’s be honest,” Bailey said.
euro zone entered Growth of just 0.1% in the first quarter of the year with Germany – the bloc’s biggest economy – stagnant.
