The UK economy has rebounded from recession, registering a 0.6% growth in the first quarter, surpassing expectations. Economists had anticipated a 0.4% growth, signaling a positive turn after the country entered a shallow recession in the latter half of 2023 due to persistent inflation.
While the production sector expanded by 0.8%, construction saw a slight decline of 0.9%. Notably, the services sector, crucial to the UK economy, experienced growth for the first time since Q1 2023, driven largely by the transport services industry.
Prime Minister Rishi Sunak hailed the news, emphasizing the effectiveness of the government’s plan despite ongoing challenges. However, Suren Thiru, economics director at ICAEW, cautioned that economic uncertainties, including upcoming general elections, could temper the positive impact of weaker inflation.
Meanwhile, the Bank of England’s Monetary Policy Committee maintained its main interest rate at 5.25%, citing persistent inflation indicators. Although near-term headline inflation is projected around 2%, the bank expects a slight uptick later in the year as the impact of energy price fluctuations diminishes.
