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The UK economy grew for the second month in a row in February, driven by expansion in manufacturing, raising hopes the UK is emerging from a technical recession.
Gross domestic product rose 0.1 per cent between January and February, the Office for National Statistics said on Friday.
That was in line with analysts’ expectations and down from January’s 0.3 per cent revised monthly growth.
Services output grew by 0.1 per cent in February, while manufacturing increased by 1.2 per cent. Construction output fell by 1.9 per cent.
Sterling barely moved on the news; it was down 0.1 per cent against the dollar at $1.2535 shortly after the announcement.
February’s figure raises the likelihood that the UK economy expanded overall in the first quarter, marking the end of the technical recession it slipped into at the end of 2023 after two consecutive quarters of negative growth.
“GDP would need to fall by an unlikely 1 per cent month-on-month or more in March for the economy to contract in the first quarter as a whole,” said Paul Dales, chief UK economist at Capital Economics.
“As a result, we can safely say that, after lasting just two quarters and involving a total fall in GDP of just 0.4 per cent or so, the recession ended in Q4,” he added.
The latest figure will be a boost for UK Prime Minister Rishi Sunak, who has pledged to grow the economy as he heads into a general election expected this year.
The Conservative party trails Labour by roughly 20 points in opinion polls.
ONS director of economic statistics Liz McKeown said: “Looking across the last three months as a whole, the economy grew for the first time since last summer.”
In the three months to February, the economy grew 0.2 per cent compared with the previous three months, making the first expansion since August 2023.
Jeremy Hunt, the chancellor, said the figures were “a welcome sign that the economy is turning a corner, and we can build on this progress if we stick to our plan”.
Hunt is hoping that growth data published in May will show that Britain has moved out of the mild recession it entered at the end of 2023, removing a political weight from the Conservatives ahead of the election.
But while growth is returning to the UK economy and inflation is expected to soon fall below the Bank of England’s 2 per cent target, there are clouds on the horizon for the chancellor.
Market expectations for BoE interest rate cuts in 2024 have been scaled back, pushing back the prospect for the start of a rate-cutting cycle that Hunt believes will shift public sentiment on the economy.
Hunt said on Friday: “Last week our cuts to National Insurance for 29mn working people came into effect across Britain, as part of our plan to reward work and grow the economy.”
Additional reporting by Mary McDougall
