The UK economy recovered at the start of the year and is likely to have already emerged from recession after figures released on Wednesday showed modest growth in January.
Data released by the Office for National Statistics (ONS) says GDP – a measure of national economic output – rose 0.2 per cent in January, following a fall of 0.1 per cent in December.
The services sector, which includes hospitality, culture and leisure, contributed the most, growing 0.2 percent during the month.
A strong month for retail sales also helped drive growth in January, as consumers made the most of post-Christmas promotions and spent more in supermarkets.
The economy could be turning a corner after falling into a technical recession late last year, with output falling 0.3 percent during the fourth quarter.
Chancellor Jeremy Hunt said: “While recent years have been difficult, today's figures show we are making progress in growing the economy, some of which makes it possible to reduce national insurance contributions by £900 next year. “.
“But if we want the growth rate to increase further we need to make work profitable, which means ending the injustice of taxing work twice.”
Data released by the Office for National Statistics (ONS) says GDP – a measure of national economic output – rose 0.2 per cent in January, following a 0.1 per cent fall in December (PA)
But shadow chancellor Rachel Reeves said Britain remains “worse” and Prime Minister Rishi Sunak's claims that his plan for the economy is working “are already in tatters after Britain was hit by the recession last year.
Liz McKeown, director of economic statistics at the ONS, said: “The economy recovered in January, with strong growth in retail and wholesale trade. Construction also performed well, with homebuilders having a good month, after being down for much of last year.
“These were partially offset by declines in film and television production, lawyers and the often erratic pharmaceutical industry. “In the last three months as a whole, the economy contracted slightly.”
Economists have warned that although figures show the UK has probably only experienced a short, shallow recession, the overall outlook for the UK economy is “bleak” and economic growth is “stagnating”.
Alfie Stirling, chief economist at the Joseph Rowntree Foundation (JRF), said The independent: “I don't think it's a particularly significant day. Small moves in the decimal points, either here or there, make little difference to the overall trajectory of the economy, which is basically flat.
“A little bit of growth for the month, but we're still down for the quarter and obviously that's due to two quarters of negative growth, so little change there.
“Secondly, what's really important is how families feel, what the real economic prospects are for people living in this country. And whether you measure it by GDP per capita, which is still low, we haven't had GDP per capita growth in almost two years or in terms of lived experience of the economy in terms of real incomes or prices. Things are incredibly weak and there is a lot of economic pain.
So I would say that on the two important points, small movements in aggregate GDP are quite irrelevant.”
GDP per capita is the amount of economic output divided by the total population and fell 0.7 percent in 2023.
Yael Selfin, chief economist at KPMG UK, said: “Forward-looking indicators point to further strengthening momentum in February, reinforcing the view that the UK experienced a short, shallow recession.
“Although economic performance has improved somewhat, the outlook remains relatively bleak. Economic growth is not expected to recover materially this year as demand has been hit by the persistent impact of high interest rates. Meanwhile, on the supply side, weak prospects for business investment and lower public sector investment will exacerbate weakness in productivity and limit long-term growth.”
Rob Wood, chief economist at Pantheon Macroeconomics in the UK, said: “Last year's mini-recession is already rapidly receding in the rear-view mirror as real wage growth drives improvement in household purchasing power.”
