Britain’s economy bounced back at the start of the year, according to figures that suggest the recession may be over.
Gross domestic product grew by 0.2 per cent in January, the Office for National Statistics said, boosted by a recovery for retailers and builders.
It comes after the economy shrank by 0.1 per cent in December.
Separate figures from surveyors suggest the housing market has turned ‘upbeat’.
Sanjay Raja, economist at Deutsche Bank, said: ‘The technical recession that the UK slipped into late last year will be short-lived.’
Back to growth: Gross domestic product grew by 0.2% in January, according to the Office for National Statistics – boosted by a recovery for retailers and builders
Gross domestic product (GDP) shrank in the last two quarters of 2023 – meeting the definition for recession – but that was much smaller than other recessions in recent decades, and surveys suggest the economy is picking up.
The High Street bounced back after a miserable Christmas, and construction also enjoyed an upturn following a subdued period for much of last year.
High inflation and soaring interest rates have taken a toll but, as energy bills fall, inflation has come down from its peak and there are hopes that the Bank of England will soon start cutting interest rates.
Lower inflation is also helping pay stretch further. Figures this week showed that in real terms wages are growing at 2 per cent.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said that the UK ‘took its first step towards exiting recession in January’.
But he warned: ‘January’s recovery may have been followed by a more muted performance in February, with the significant wet weather likely to have suppressed activity.’
Meanwhile, the latest figures from the Royal Institution of Chartered Surveyors showed ‘grounds for encouragement’ for the housing market as buyer interest and selling instructions picked up in February.
Figures out next week are expected to show inflation falling below 4 per cent, which could further add to the cheer.
Next week also sees the Bank of England’s March interest rate decision.
Rates are expected to remain on hold at 5.25 per cent but markets will be watching for signs of when they will start to be cut.
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