The U.K. economy has finally emerged from a recession, with official figures showing that gross domestic product increased by 0.6% in the first quarter, exceeding expectations. The country had entered a shallow recession in the second half of 2023 due to persistent inflation that was hurting the economy.
Economists had predicted growth of only 0.4% for the previous three months, but the U.K.’s production sector experienced growth of 0.8% during this period, while the construction sector saw a decline of 0.9%. In March alone, the economy grew by 0.4%, following a 0.2% expansion in February.
The Bank of England’s Monetary Policy Committee issued a warning on Thursday regarding persistent inflation indicators, stating that they “remain elevated.” Despite this, the committee decided to keep the main interest rate at 5.25%. The central bank predicted that headline inflation would be close to 2% in the near-term, but expected a slight increase later in the year as the effects of a sharp decline in energy prices diminished.
This is still an evolving news story and updates will be provided shortly as more information becomes available about how long this positive trend will continue and what steps are being taken to maintain it in future quarters and years to come.
