The UK economy is showing signs of recovery after avoiding a recession with a growth of 0.6 per cent in the first quarter of 2023, according to the Office for National Statistics. This growth was faster than expected, as economists had predicted a 0.4 per cent improvement. Despite two consecutive quarters of decline that technically put the country in a recession in the latter half of 2023, this positive growth is a promising sign for the future prospects of the UK economy.
Chancellor Jeremy Hunt responded to the GDP figures by stating that the economy is showing signs of returning to full health for the first time since the pandemic hit. He highlighted several factors that contribute to this positive outlook, including faster wage growth compared to inflation, falling energy prices, and tax cuts benefitting the average worker by £900. These factors are all contributing to an overall sense of optimism about the UK economy’s future prospects.
Liz McKeown, director of economic statistics at ONS, noted that this positive growth was driven primarily by strong performance in service industries such as retail, public transport, haulage, and health sectors. However, there was some offset from weak performance in construction industry and car manufacturers also had a good quarter contributing significantly to overall growth.
The fact that service industries were driving this growth is particularly noteworthy as it has been reported that these industries have been more resilient during the pandemic than others such as construction or manufacturing industry. This could be due to their ability to adapt quickly to remote working arrangements and changing consumer behaviour patterns during lockdowns or simply because they are less reliant on physical goods production which has been disrupted globally due to supply chain issues brought about by COVID-19 outbreaks worldwide.