The UK economy received a much-needed boost in February, growing by 0.1%, signalling hopes of a potential exit from the recent recession. Official figures, released by the Office for National Statistics (ONS), indicated that areas such as the car industry triggered the growth, despite construction being negatively impacted by wet weather. The estimates provide an indication of the UK’s economic outlook, which fell into a recession at the end of 2023. The ONS stated that the economy grew for the first time since last summer based on the three months to February as a whole.
Chancellor, Jeremy Hunt, believes that the new figures are a “welcome sign that the economy is turning a corner” and that they provide evidence that the government’s growth plan is working. Growing the economy was a significant promise made by Prime Minister Rishi Sunak last year, with consumers and businesses feeling the pinch from higher prices and interest rates. Despite the promising figures, Labour’s Shadow Chancellor Rachel Reeves highlighted that the country was worse off due to low growth and high taxes. Reeves said that “The Conservatives cannot fix the economy because they are the reason it is broken”.
The revised estimates for gross domestic product (GDP) in January grew from 0.2% to 0.3%. February’s output from the UK’s production rose by 1.1%, whilst the services sector, which includes hairdressing and hospitality, experienced growth, with public transport and haulage having a strong month. The construction sector, however, saw a 1.9% decrease in output due to persistent rain hampering building projects. Yael Selfin, chief economist at KPMG UK, insists that February’s figures indicate that the recession may already be over.
Despite some sectors showing growth, Dr Roger Barker, director of policy at the Institute of Directors, claims that industries such as hotels and hospitality continue to struggle. Economists also note that the Bank of England’s previous interest rate increases are still filtering through to the economy. Currently, experts are divided on when the Bank may cut interest rates over the summer, providing relief to mortgage holders and borrowers. Monthly data is subject to volatility, with Danni Hewson, Head of Financial Analysis at AJ Bell, suggesting that the data is “unlikely” to influence the Bank’s Monetary Policy Committee thinking
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