GBR | May 16, 2023

UK economy grows by 0.1 per cent in the first quarter

/ Our Today

Reading Time: 2 minutes

However, inflation continues to weigh down economic progress

The United Kingdom’s economy grew by 0.1 per cent in the first quarter, following an unexpected contraction in March, according to the latest official figures.

The construction sector expanded by 0.7 per cent, while manufacturing performance went up by 0.5 per cent in the first quarter with 0.1 per cent growth logged in services and production. On a monthly basis, services dropped by 0.5 per cent in March, particularly because of declines in wholesale and retail trade and motor repairs.

The national statistics agency said there was no growth in real household expenditure, as incomes remained under the squeeze of higher prices. U.K. growth has been muted so far this year, coming in at 0.4 per cent in January and flat in February, after the economy narrowly avoided a technical recession in 2022.

Inflation remains a more severe blight on the U.K. than on other major economies with the March reading still above 10 per cent. The Bank of England last Thursday raised interest rates by 25 basis points to 4.5 per cent making its twelfth consecutive hike in an attempt to combat stubbornly high prices.

More optimistically, the central bank said it no longer expects the U.K. to enter a recession this year, despite previously forecasting its longest-ever recession. The Bank of England now forecasts the U.K.’s economy will be flat over the first half of this year, growing 0.9 per cent by the middle of 2024 and 0.7 per cent by mid-2025.

Send feedback to [email protected]


What To Read Next