UK looks on track to exit recession

Britain is on course to exit its shallow recession after economic output grew for a second month in a row in February and January's reading was revised higher, official data showed on Friday.

GDP expanded by 0.1% in monthly terms in February, as expected in a Reuters poll of economists.

January's reading was revised to show growth of 0.3%, up from 0.2% earlier, the Office for National Statistics said.

Britain's economy fell into recession in the second half of 2023, leaving Prime Minister Rishi Sunak with a challenge to reassure voters that the economy was safe with him before an election expected later in 2024.

“These figures are a welcome sign that the economy is turning a corner,” finance minister Jeremy Hunt said in response to Friday's data.

Business surveys suggest growth continued in March.

Despite the tentative recovery, GDP remains below its level of June 2023, before the latest downturn took place, and has stayed broadly flat since early 2022.

“While recession concerns are disappearing into the rear-view mirror, the longer-term outlook is still difficult, with the lagged effect of earlier interest rate hikes and chronic supply side constraints likely to continue limiting the UK’s growth potential,” Suren Thiru, economics Director at ICAEW, an accountancy industry body, said.

Economic output was 0.2% lower than its level in February 2023 — a little better than the 0.4% gap predicted by economists.

The services sector which dominates the economy grew by 0.1% in monthly terms, as expected. But manufacturing output exceeded forecasts, rising 1.2% on the month. Construction sank 1.9%, the biggest drop in just over a year. 

Reuters