In the first quarter of 2024, the UK’s economy experienced robust growth, marking the most significant expansion in nearly three years. This growth effectively ended the brief recession from the latter part of 2023 and provided a boost to Prime Minister Rishi Sunak just ahead of an upcoming election.
According to the Office for National Statistics (ONS), the gross domestic product (GDP) of the UK expanded by 0.6% between January and March, representing the strongest growth since the fourth quarter of 2021, which saw a 1.5% increase.
Exceeding Expectations
Economists surveyed by Reuters had anticipated a more modest 0.4% GDP expansion for the first quarter, following a 0.3% contraction in the final quarter of 2023. The actual growth of 0.6% surpassed these projections, signaling a more robust recovery.
Positive Outlook and Response
Friday’s release of economic data was welcomed by Prime Minister Sunak, who mentioned that the country’s economy had “turned a corner.” However, the opposition Labour Party, currently leading in opinion polls, criticized Sunak and Finance Minister Jeremy Hunt, claiming they are out of touch with voters’ financial sentiments.
Statements from Officials
Finance Minister Jeremy Hunt remarked on the encouraging growth figures, stating, “There is no doubt it has been a difficult few years, but today’s growth figures are proof that the economy is returning to full health for the first time since the pandemic.”
Bank of England’s Forecast
The Bank of England, having maintained interest rates at a 16-year high, had predicted a 0.4% growth rate for the first quarter and a smaller 0.2% increase for the second quarter of 2024.
Currency Impact
Following the data release, the British pound strengthened against the U.S. dollar. Additionally, on a monthly basis, the economy grew by 0.4% in March, surpassing the 0.1% growth forecasted by economists in the Reuters poll.
Recovery Progress
Despite this positive growth, Britain continues to be one of the slower countries in the G7 to recover from the pandemic’s effects. By the end of the first quarter of 2024, the UK’s economy was only 1.7% larger than its pre-pandemic level in late 2019, with Germany being the only G7 nation with a worse recovery rate.