UK economy exits recession with fastest growth in two years

The UK economy made a strong rebound, exiting last year’s technical recession with a faster-than-expected growth rate of 0.6% in two years.

This positive news comes as a boost for Rishi Sunak ahead of the general election.

The growth was driven by a surge in car manufacturing and a broad-based expansion in services. This 0.6% increase surpassed both the Bank of England’s forecast of 0.4% and the expectations of economists polled by Reuters.

Released by the Office for National Statistics, these GDP numbers signify the UK’s formal recovery from the mild recession experienced in the second half of 2023, when output contracted slightly for two consecutive quarters due to high borrowing costs and prices.

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“The UK economy started the year with a bang,” said Henry Cook, economist at the financial company MUFG. He added that the country had “managed to navigate the energy crisis and period of rapid monetary tightening without experiencing a protracted downturn”.

The 0.6 per cent figure also represented the strongest growth for any G7 country with available data, comparing with 0.3 per cent for the Eurozone over the same period and 0.4 per cent for the US.

The news was a boost for Sunak, who last year made economic growth one of his five key pledges to the British public.

The prime minister’s Conservatives trail Labour by roughly 20 points in opinion polls. Jeremy Hunt, chancellor, hailed the GDP data as “proof that the economy is returning to full health for the first time since the pandemic”.

But Rachel Reeves, Labour’s shadow chancellor, said it was “no time for Conservative ministers to be doing a victory lap”, adding that the economy was “still £300 smaller per head” than when Sunak became prime minister.