UK economy experiences consecutive growth following slight recession

UK economy experiences consecutive growth following slight recession

February’s expansion in national output has sparked hopes that the UK economy is finally emerging from a recession. The UK’s gross domestic product increased by 0.1% in February, marking the second consecutive month of growth. Additionally, January’s growth reading was revised up from 0.2% to 0.3%, according to data released by the Office for National Statistics. This growth is a positive sign following the recession the UK experienced late last year, which was characterized by two quarters of economic contraction.

If the economy continues to expand in the first three months of 2024, the recession can officially be declared over, bringing the UK closer to this goal. The growth seen in February aligns with analysts’ expectations and indicates a potential turnaround for the UK economy. The Head of Market Strategy at Ebury, Matthew Ryan, remains cautiously optimistic about the UK’s economic outlook, citing the upcoming drop in household energy bills as a support for spending activity.

The largest driver of growth in February was production, which increased by 1.1% following a decline in January. Services output also saw a modest rise of 0.1%, while construction output fell by 1.9% due to adverse weather conditions. Despite the modest growth, Chancellor Jeremy Hunt views the data as a positive sign that the economy is heading in the right direction. Last year’s recession was a setback for the ruling Conservative party as they prepare for an upcoming general election in 2024.

The recent economic growth may alleviate pressure on the Bank of England to implement interest rate cuts. It is now expected that the Bank will reduce borrowing costs from their 16-year high of 5.25% in June. The positive growth in February is raising hopes for a soft landing, where inflation can be controlled without sparking a sustained recession. This news is a welcome development for the UK economy and may signal a positive trajectory for the future.

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