The recovery from last year’s recession gathered steam in February as the UK economy posted its second consecutive month of growth, new figures show.
The UK economy grew 0.1 per cent in February, according to figures from the Office for National Statistics (ONS), in line with economists’ expectations. This followed a 0.2 per cent expansion in January.
Production, which includes manufacturing, recorded the fastest increase, growing 1.1 per cent in February. The all-important services sector grew 0.1 per cent.
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February’s poor weather meanwhile meant the construction sector saw a 1.9 per cent decline in output.
“The economy grew slightly in February with widespread growth across manufacturing, particularly in the car sector. Services also grew a little with public transport and haulage, and telecommunications having strong months,” ONS Director of Economic Statistics Liz McKeown said.
“Partially offsetting this there were notable falls across construction as the wet weather hampered many building projects.”
The figures will raise hopes that the UK economy can move on from a disappointing 2023. The economy was largely stagnant due to the influence of stubborn inflation and high interest rates, slipping into a shallow recession in the second half of the year.
However, inflation has fallen sharply from its peaks while the Bank of England is expected to start cutting interest rates later this year, both of which will support consumers.
Analysts at Pantheon Macroeconomics forecast that real disposable income could rebound 2.2 per cent in 2024, which would help consumer spending to rise two per cent in the year.
Survey data suggests economic activity is on an upward trend with the closely-watched purchasing managers’ index suggesting private sector activity in the UK expanded at a faster rate than the US economy in both February and March.
Economists think the UK will grow 0.4 per cent this year, although the Office for Budget Responsibility (OBR) expect a 0.8 per cent expansion.
The Conservatives are hoping that a steadily improving economy will improve their prospects ahead of an election later this year. They currently trail Labour by around 20 percentage points.
Rishi Sunak has made growing the economy one of his key pledges, a promise which he has so far made little progress on delivering.