Britain’s GDP has finally risen – by 0.2 percent – bucking the trend of last year’s stagnation and the 0.1 percent drop inflicted on the economy in the previous quarter.
Responding to the latest GDP figures showing the economy grew by 0.2% in January, Chancellor Jeremy Hunt said: “While the last few years have been tough, today’s numbers show we are making progress in growing the economy – part of which makes it possible to bring down national insurance contributions by £900 this coming year.
“But if we want the rate of growth to pick up more we need to make work pay which means ending the unfairness of taxing work twice.”
Real GDP is estimated to have fallen by 0.1% in the three months to January 2024, compared with the three months to October 2023.
This overall growth is reflective of a pattern of steady growth in the overall GDP since it plummetted during the Covid-19 pandemic.
The rise indicates that the economy could be turning a corner after dipping into a technical recession at the end of last year, with GDP declining by 0.3% over the fourth quarter.
The total underlying trade deficit widened £2.2bn to £13.8bn in the three months to January 2024.
The largest contributor for the rise in GDP was the growth in services output which went up by 0.2 percent, but in the three months to January 2024 services output showed no growth.
Production output fell by 0.2% in January 2024, and in the three months to January 2024 production output also fell by 0.2%.
Conversely construction output grew by 1.1 percent in January but fell by 0.9 percent in the last three months of 2023.
The ONS figures showing a rise in GDP were driven by better news from the retail and wholesale sectors.
The ONS Director of Economics Statistics Liz McKeown, said: “The economy picked up in January with strong growth in retail and wholesaling. Construction also performed well with housebuilders having a good month, having been subdued for much of the last year.
“These were partially offset by falls in TV and film production, lawyers and the often-erratic pharmaceutical industry.”
Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, the wealth manager, said: “The UK economy took its first tentative steps out of recession in January with growth of 0.2 per cent, raising hopes that the country’s downturn will be short-lived and shallow.
“Britain’s economy fell into a technical recession in the second half of last year, as defined by two consecutive quarters of negative growth, after being battered by high interest rates, high inflation, bad weather, perpetual industrial action and lacklustre retail sales.
“The hope from here is that January’s slightly more promising GDP figure, largely driven by a strong performance in the services sector with upbeat retail sales volumes helping to offset the steep drop in December, will energise the economy and set it on the road to recovery pushing any recession talk firmly into the rear-view mirror.”
She added: “Any signal that the downturn may already be over will be good news for households, who may have been feeling anxious about the outlook for their finances.
“Household budgets have been battered by rising bills and high borrowing costs over the past couple of years, so worries that a long-drawn out recession will wreak even more damage may hopefully now dissipate.”
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