Britain’s economy expanded by 0.1 percent in February, further fuelling recovery hopes after sliding into a shallow recession in the second half of last year, official data showed Friday.
The gross domestic product uptick followed an upwardly revised 0.3 percent rise in January, after an initial reading of 0.2 percent growth, the Office for National Statistics (ONS) said in a statement.
Growth for the first quarter as a whole would signal the end of the UK’s recession, and many economists say another contraction now appears unlikely.
“The economy grew slightly in February with widespread growth across manufacturing, particularly in the car sector,” said ONS director of economic statistics Liz McKeown.
“Services also grew a little with public transport and haulage, and telecommunications having strong months,” she added.
“Partially offsetting this there were notable falls across construction as the wet weather hampered many building projects.”
The UK economy shrank in both the third and fourth quarters of 2023, meeting the technical definition of a recession based on high interest rates and a cost-of-living crisis.
– Outlook ‘foggy’ –
“The sun is finally out but the UK economy outlook remains foggy,” said Yael Selfin, chief economist at KPMG UK.
“Despite weaker momentum in February, the economy’s ongoing recovery is the latest piece of evidence that the shallow technical recession is already behind us.”
Capital Economics economist Paul Dales said GDP would need to slump by an “unlikely” 1.0 percent in March in order to spark a first-quarter contraction that would prolong the recession.
“As a result, we can safely say that, after lasting just two quarters and involving a total fall in GDP of just 0.4 percent or so, the recession ended in the fourth quarter,” he said.
In reaction to Friday’s news, finance minister Jeremy Hunt said that the figures were a “welcome sign” that the economy was “turning a corner”.
An emergence from recession would hand a major boost to embattled Prime Minister Rishi Sunak ahead of a general election this year.
His governing Conservatives are trailing far behind Keir Starmer’s main opposition Labour Party in opinion polls.
Sunak was buoyed last month by news that inflation had hit a nearly two-and-a-half-year low of 3.4 percent in February, easing the nation’s cost-of-living crunch.
Selfin cautioned that there were “limits to the UK’s growth potential”, noting “fragile” consumer spending, a weak housing market and uncertainties surrounding the election.
The Bank of England had last month held its key interest rate at a 16-year high of 5.25 percent, as inflation remains stubbornly above its 2.0 percent target.
