UK Avoids Recession With 0.1% Q1 Growth

Today is May 12th of the year 2023, and it is currently 7:40 in the morning on a Friday.

Today's figures reveal that Britain looks set to avoid a technical recession in the first half of this year, marking a significant change in the country's economic performance over a short period of time.

The UK's GDP went up by 0.1% between January to March. This figure measures everything that was produced or done in the economy. ONS found this out.

The City expected the number. The monthly figure shows fragility. The UK economy remains fragile.

In March, GDP went down by 0.3% due to families spending less money on services. This is a big part of the UK economy, making up £2 out of every £3 of the country's output.

Experts predicted that there would be no growth in production during March.

The UK's economy has been doing better since the beginning of the year.

At that time, experts were warning that the country could face its longest recession in a century. The recession could cut about three per cent of the Gross Domestic Product (GDP) and could start in 2023.

Energy prices dropped, but employment is high and government aid helped. Houses and companies stayed strong and kept spending and investing.

Jeremy Hunt, the Chancellor, stated that the government's priority is to concentrate on competitive taxes, labour supply, and productivity. Their aim is to sustain and increase future growth.

The Bank of England says there won't be a recession in new forecasts. The GDP has had a big upgrade. This is the biggest upgrade since 1997. The Bank of England was made independent in 1997.

In November, the Bank Governor Andrew Bailey and his team predicted 15 months of negative GDP growth. They added two percent to the output forecast.

Yesterday, the Bank of England increased interest rates for the 12th consecutive time. The rates went up by 25 basis points to reach 4.5%. It is now at a level that was last seen nearly 15 years ago.

Bailey said only 1/3 of the 440 basis point Bank increase has affected economy. This might mean less output in the future.

KPMG UK's chief economist, Yael Selfin, thinks that there won't be a recession. But higher borrowing costs and tighter credit could make things difficult. Business and household activity might be reduced. Business investment and consumer spending probably won't increase soon.

She said that although the first quarter showed positive growth, we still need to consider the slow progress ahead.