The UK economy has shown signs of improvement as it grew by 0.6% in the first quarter of the year, surpassing economist expectations of just a 0.4% increase. Prime Minister Rishi Sunak can now mark off another one of his five pledges – to grow the economy. However, despite this growth, the overall economic outlook for the UK is still challenging.
The Office for National Statistics reported a 0.4% growth in March and a 0.2% growth in February, contributing to the overall positive economic performance. This growth marks the most substantial economic improvement the UK has seen since the Covid pandemic. Despite facing two consecutive quarters of economic contraction at the end of 2023, resulting in a brief recession, the country has shown signs of recovery.
The OECD has forecasted modest growth for the UK over the next 18 months, lowering its GDP forecast to 0.4% for this year. Additionally, projections for 2025 growth have also been reduced, making the UK the second-slowest growing economy among the G7 nations. Despite these challenges, Chancellor Jeremy Hunt acknowledged that wages are expected to outpace inflation and falling energy prices are benefiting workers and businesses alike.
The Bank of England has maintained high interest rates at 5.25% in response to persistent inflation rates. While this may help curb inflationary pressures, it could also slow down economic growth further.
Overall, while there are positive signs of economic recovery on