UK GDP Sees 0.2% Growth in January, Indicating Recovery

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The latest statistics from the Office for National Statistics (ONS) reveal that the UK’s Gross Domestic Product (GDP) experienced a 0.2% growth in January, marking a positive turn following a 0.1% decline in December 2023.

This return to growth follows the country’s entry into a technical recession at the end of last year, with GDP falling by 0.3% over the three months ending in December. However, despite the monthly growth observed in January, real GDP is still estimated to have decreased by 0.1% in the three months leading up to January, compared to the three months ending in October 2023. Notably, services output showed no growth during this period, while production output fell by 0.2% and construction output dropped by 0.9%.

Nicholas Hyett, investment manager at Wealth Club, noted that despite disruptions to global supply chains and strikes in various sectors, the UK economy demonstrated modest growth in January, primarily driven by the consumer sector and construction activity. He highlighted that sustained growth could pave the way for the country to exit the recession soon.

Rob Morgan, chief investment analyst at Charles Stanley, emphasized that while the first quarter of 2024 has shown promising signs, further data for February and March is necessary to confirm the UK’s recovery from the mild recession. He indicated that significant economic weaknesses could prompt the Bank of England to consider interest rate cuts later in the year, although the current economic indicators suggest a hold on rates for the time being, pending clearer signals of sustained recovery.