UK economy grows 0.6% in Q1 2024, exits 'technical recession'

31 May '24

2 min read

UK economy grows 0.6% in Q1 2024, exits 'technical recession'

Pic: Adobe Stock

Insights

Initial estimates of economic growth in early May suggest that the UK economy grew by 0.6 per cent in Q1 2024.
This implies the economy has exited the 'technical recession' that it entered in Q3 2023 and has not kept pace with population growth.
The central bank expects inflation to rise a bit over 2025 or so before returning to the 2-per cent target in 2026.

Initial estimates of economic growth published early this month suggest that the UK economy grew by 0.6 per cent in the first quarter (Q1) this year. This implies the United Kingdom has exited the ‘technical recession’ that it entered in Q3 2023.

However, this growth comes in a context of relatively sluggish recovery since the COVID-19 pandemic, Phil Brien, senior researcher at the House of Commons Library specialising in public spending, wrote in an economic update.

The economy has also not kept pace with growth in population. Gross domestic product (GDP) per person shrank in real terms in every quarter last year, although this measure also returned to growth in Q1 2024, he wrote.

Consumer price index (CPI)-based inflation fell to 2.3 per cent in April, well below the 11.1 per cent it reached in October 2022, which the Office for National Statistics (ONS) estimates was the highest rate since October 1981.

However, this month’s fall in inflation was not as large as economists had predicted, and the rate remains above the Bank of England’s target of 2 per cent, Brien observed.

The Bank of England currently expects inflation to rise slightly over the next year or so before returning to the target in 2026.

Labour market data has been adding to the central bank’s uncertainty about whether to reduce rates, he added.

Fibre2Fashion News Desk (DS)

More Textiles News - United Kingdom...