UK economy returned to modest growth in first three months of 2024

The UK economy saw 0.6% growth during the first quarter of 2024 according to the latest GDP data from the Office of National Statistics (ONS).

The return to growth for the UK economy brings to an end the short recession in the latter half of 2023 which saw two consecutive quarters of contraction in GDP. Compared with the same quarter a year ago, real GDP is estimated to have increased by 0.2%, according to the ONS.

Services, which make up the majority of the UK economy, saw a return to growth after three consecutive quarters of decline, grew 0.7% in the three months from January to March 2024, with growth in 11 of 14 subsectors. Among the fastest growing service industries was transportation and storage, which recorded 3.7% growth. Meanwhile the hospitality sector shrank by 0.2%.

The production sector saw growth of 0.8% during Q1 2024, with manufacturing output estimated to have increased by 1.4%, reversing a 1% decline in the last three months of 2023.

Construction output, however, fell by 0.9% in the first quarter of 2024, with its overall output 0.7% lower than the same time in 2023. The ONS attribute the sector performance in part to a decline in commercial sector new work, as well as adverse weather conditions slowing progress on projects.

The return to growth for the UK economy comes as inflation continues to fall closer to the Bank of England’s 2% target. However, interest rates remain at their highest levels since prior to the 2008 financial crisis, with the Bank of England’s Monetary Policy Committee yesterday (9th May) opting to hold rates again at 5.25%, with analysts now expecting rates to begin falling in late summer or early autumn.