According to recent projections, the UK economy is showing signs of recovery from its recession, with growth in February at a slow pace. Economists surveyed by Refinitiv suggest that GDP increased by 0.1% in February, marking the first consecutive months of growth since August to September of the previous year. However, this growth falls far below the levels seen in other regions, such as the United States.
Despite this, improvements in struggling sectors like construction and manufacturing are expected to support the recovery. The S&P PMI surveys for February indicate that these sectors may show signs of stabilization after prolonged declines since 2022.
While positive indicators have been observed, concerns remain about slower growth in the service sector, which has been a key driver of economic expansion in recent months. Kathleen Brooks, research director at XTB, believes that subdued service sector growth could raise fears about consumer struggles and potentially impact future economic growth. This could also influence the Bank of England’s decision on interest rates in the coming months.
Looking ahead, Matthew Ryan, head of market strategy at Ebury, suggests that recent data points towards a gradual recovery in economic activity primarily led by the services sector. The upcoming GDP figures for the first quarter of the year are anticipated to be released in early May but may further support the hypothesis of a nascent economic expansion in the UK.
Overall, while progress has been made towards recovering from recession, there is still work to be done before we can say that we are out of it entirely.
