The United Kingdom (UK) is currently on a path to ending its present period of recession with the economy registering growth of a meagre of 0.1 per cent.

This growth comes despite construction and retail being hit by one of the wettest starts to a year on record. The Office for National Statistics (ONS) reported on April 12 that the UK gross domestic product (GDP) rose by 0.1 per cent in February, matching City economists’ forecasts and extending a recovery after growth in January was revised up from 0.2% to 0.3 per cent.

The UK met the technical definition of recession after contracting in the third and fourth quarters of last year. An end to the slump will require a continued expansion in March to meet a quarterly return to growth.

First expansion since last summer 

This is the first expansion over three months since last summer with activity recovering from a slump last year as households cut back on spending amid the cost of living crisis. Growth in February was driven by manufacturing in particular with a sharp recovery in car production, where output was up by 17.8 per cent compared with the same month a year earlier.

However, construction output collapsed by 1.9 per cent on the month as heavy rainfall forced cranes to sit idle on building sites. The UK’s dominant services sector, which makes up about four-fifths of the economy, also struggled for growth momentum with an expansion of only 0.1 per cent on the month amid weaker activity in retail and wholesale distribution.

Liz McKeown, ONS director of economics statistics, reports, “The economy grew slightly in February with widespread growth across manufacturing, particularly in the car sector. Services also grew a little with public transport and haulage and telecommunications having strong months.

Rishi Sunak is under pressure to show progress 

UK Prime Minister Rishi Sunak is under pressure to show progress on the economy before sending voters to the polls in a general election expected later this year, with the Conservatives trailing Labour in opinion polls. Chancellor Jeremy Hunt said the figures were a “welcome sign that the economy is turning a corner, and we can build on this progress if we stick to our plan”.

The ONS highlighted that conflict in the Middle East had disrupted global supply chains, hitting retailers, vehicle mechanics and health and social work, where approximately one in 10 businesses were affected. However, local economists say GDP would need to fall by an unlikely one per cent or more in March for the economy to contract over the first quarter of 2024, as a whole, meaning an escape from a short and shallow recession is widely anticipated. 

Business surveys have also pointed to continued strength in private sector activity in March. However, growth is expected to remain weak while households and businesses remain under pressure from elevated Bank of England interest rates and significantly higher prices for goods and services than three years ago. 

Despite the monthly recovery in output at the start of 2024, GDP remains below its level of June 2023, and has stayed broadly flat since early 2022.

Shadow chancellor Rachel Reeves declared, “After 14 years of Conservative economic failure, Britain is worse off with low growth and high taxes. The Conservatives cannot fix the economy because they are the reason it is broken.”