The UK economy grew by 0.7 per cent between January and March, a much stronger figure than the previous estimate of 0.6 per cent, revised figures from the Office for National Statistics said.
This is the fastest pace since 2021 and the highest among all G7 countries.
It is also rare positive news for Prime Minister Rishi Sunak ahead of next week’s general election.
Lindsay James, investment strategist at Quilter Investors, said: “With UK GDP growth showing no increase in the latest data covering April, the news that the best ever growth rate of 0.6% in the first quarter has “Slightly updated compared to 0.6% in the first quarter.” Previous readings will do little to excite investors.
“The Bank of England is forecasting a more modest growth rate of 0.2% in the second quarter, which, although forecast before the election was announced and in fact releasing better-than-expected first quarter data, may be close to the truth as recent surveys suggest spending decisions within the sector have stalled.” Dynamic services during election period.
Growth was driven by services, which rose 0.8% in the quarter with broad-based growth across the sector; Elsewhere, the manufacturing sector grew by 0.6 percent while the construction sector fell by 0.6 percent.
Thomas Pugh, economist at leading audit, tax and advisory firm RSM UK, said: “The recovery in the first quarter turned out to be stronger than expected.
“All the data indicates that the economy is expected to continue to grow in the second quarter. We then expect growth to accelerate in the second half of this year and into 2025 with inflation falling significantly, tax cuts and lower interest rates giving households an income boost.
“The big unknown is how much of this increase in income households will actually spend. In fact, despite real household disposable income growing by 0.7 percent in the fourth quarter and increasing consumer confidence, the household savings ratio rose to 11.1 percent in the last quarter.” From 10.2% in the fourth quarter, indicating that households were still rebuilding their savings reserves at the end of last year.
Danny Hewson, head of financial analysis at AJ Bell, said: “It’s the slightest sign of improvement, but when it comes to UK GDP growth, every little bit of progress really helps.”
“A growing economy creates wealth, putting more money in people’s pockets and increasing the amount of taxes that flow into depleted treasury coffers.
“Finally, households are feeling less pressure as real disposable income rises by 0.7 per cent, and money is being spent on hairdressers, pubs, restaurants and shops.”
By Robert Hargreaves Via CityAM
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