The UK economy expanded in the first quarter, showing more resilience than forecast just a few months ago, although performance in March was much worse than expected.
Gross domestic output, or GDP, grew by 0.1 percent between the final quarter of 2022 and the first three months of this year, according to data published by the Office for National Statistics on Friday.
On Thursday, the Bank of England said it expected the economy to remain flat in the first and second quarters and to pick up growth in the rest of the year. This means it no longer expects a recession because of lower energy prices, stronger global growth and stronger consumer and corporate confidence. Back in February, the BoE predicted an economic contraction throughout 2023 and the first quarter of next year.
ONS data showed that the quarterly rate was revised up to 0.5 per cent by growth in January, while output fell by 0.3 per cent between February and March as the services sector stuttered.
Economists polled by Reuters expect GDP to be flat in March.
Darren Morgan, director of economic statistics at the ONS, said the decline in March was driven by a “broader contraction across the services sector”.
He explained that despite the launch of the new number plates, car sales were low by historical standards – continuing a trend seen since the start of the pandemic – with warehousing, distribution and retail also having a weak month.
The decline was partially offset by a strong month for manufacturing as well as growth in gas production and distribution and construction.
Chancellor Jeremy Hunt said: “It’s good news that the economy is growing but we need to focus on competitive taxes, labor supply and productivity to deliver on the government’s growth priorities.”