The UK economic system is ‘going gangbusters’ after rising on the quickest price in two years in a significant increase for households forward of the overall election.
After the ‘shortest and shallowest’ recession on report, official figures beat forecasts to point out GDP rose by 0.6 per cent within the first quarter of the yr – the quickest price of progress since late 2021.
Britain’s economic system outpaced France, Germany and the US within the first three months of the yr, Workplace for Nationwide Statistics (ONS) figures present.
The UK is the third-best performing nation within the G7 for the reason that 2016 Brexit referendum, falling behind solely the US and Canada and beating European rivals Germany, Italy and France.
ONS Chief Economist Grant Fitzner mentioned: ‘To paraphrase former Australian prime minister Paul Keating, you can say the economic system goes gangbusters.’
The Financial institution of England is tipped to chop rates of interest subsequent month because the UK economic system improves
Andrew Bailey, Governor of the Financial institution of England. Based on official figures the UK is the third-best performing nation within the G7 for the reason that 2016 Brexit referendum
Official figures beat forecasts to point out GDP rose by 0.6 per cent within the first quarter of the yr – the quickest price of progress since late 2021
Rishi Sunak mentioned the ‘plan is working’ and the economic system had ‘turned a nook’ amid a wave of upbeat information.
The Financial institution of England is tipped to chop rates of interest subsequent month, which would scale back mortgage prices. Inflation has fallen from a peak of 11 per cent to just about attain the goal of two per cent, taking the strain off family funds.
The FTSE 100 – the index of the largest UK-listed firms – has been on a record-breaking run in latest weeks and hit one other all-time excessive yesterday.
Final yr ONS figures confirmed that the UK slipped right into a technical recession because the economic system contracted for 2 consecutive three-month durations.
Output shrank 0.3 per cent between October and December after contracting by 0.1 per cent between July and September.
However Rob Wooden, chief UK economist at Pantheon Macroeconomics, mentioned the economic system was now ‘again with a bang’.
‘The economic system rebounded strongly from final yr’s recession, greater than recovering all of the misplaced floor in simply the primary quarter of 2024,’ he mentioned.
Britain’s economic system was the fastest-growing within the G7, alongside Canada, within the first quarter. As compared, Germany and France reported sluggish progress of 0.2 per cent.
Britain’s 0.6 per cent progress outpaced the expectations of analysts, who had estimated 0.4 per cent.
Richard Carter, an analyst at Quilter Cheviot mentioned: ‘The excellent news continues to circulate for the UK. Inflation has eased and the worst of the price of residing disaster is behind us. The UK is clearly getting into a extra optimistic interval. The Authorities can be hoping to benefit from this within the lead-up to the overall election.’
The ONS figures make a mockery of Shadow Chancellor Rachel Reeves’ accusations that ministers have been ‘gaslighting’ the general public concerning the economic system.
Chancellor Jeremy Hunt mentioned: ‘There isn’t a doubt it has been a tough few years, however as we speak’s progress figures are proof that the economic system is returning to full well being for the primary time for the reason that pandemic.’
Mr Sunak mentioned: ‘We all know issues are nonetheless powerful for many individuals however the plan is working and we should follow it.’
After slashing Nationwide Insurance coverage by a complete of 4p in his autumn and spring Budgets, Mr Hunt is plotting additional pre-election tax cuts.
Nonetheless, higher-than-expected authorities borrowing might scupper plans to decrease the burden.
Susannah Streeter, head of cash and markets at Hargreaves Lansdown, mentioned: ‘The UK economic system has jogged out of recession, selecting up tempo greater than anticipated. It is clear a nook has been turned, as intense cost-of-living pressures subside, and shoppers and firms eye decrease borrowing prices on the horizon.’
Danni Hewson, head of economic evaluation at AJ Bell, mentioned the recession will ‘go down in historical past books because the shortest, shallowest recession on report’.
The sentiment echoed feedback made by Financial institution of England governor Andrew Bailey this week as he hinted at price cuts. He mentioned: ‘We are actually seeing a restoration and we appear to have turned a nook.’
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