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UK economy nudges up slightly

UK economy nudges up slightly
Emma Lunn
Written By:
Emma Lunn

The economy grew in February, raising hopes that the UK will soon be out of recession.

According to the Office for National Statistics (ONS), the UK economy grew; monthly real gross domestic product (GDP) is estimated to have grown by 0.1% in February 2024, following growth of 0.3% in January 2024 (revised up from 0.2% growth).

Real GDP is estimated to have grown by 0.2% in the three months to February 2024, compared with the three months to November 2023.

recession was declared in February after data showed two quarters of economic contraction. If the economy expands for three months, the UK will be officially out of recession.

Production output grew by 1.1% in February 2024 and was the largest contributor to the rise in GDP in February. Services output also grew, by 0.1%, while construction partially offset these with a fall of 1.9%.

Professional, scientific and technical activities was the largest positive contributor to the rise in services output in this three-month period, growing by 1.1% in the three months to February 2024. The next-largest contributions came from admin and support service activities, which grew by 1.6%, and transportation and storage, with output here rising by 2.2%.

These growths were partially offset by a 1.4% fall in education, a 0.7% fall in human health and social work activities and a 0.7% fall in financial and insurance activities in the three months to February 2024.

‘UK growth looks pretty pitiful’

Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “February’s slight expansion follows revised GDP growth of 0.3% in January, raising expectations the UK economy will expand in the first quarter of 2024 and bring the technical recession to an end.

“News that the downturn may already be over will certainly be welcomed by households. Personal budgets have been battered by rising bills and high borrowing costs over the past couple of years, with some consumers still grappling with the financial hangover caused by the cost-of-living crisis.

“Almost seven-and-a-half million people in the UK were struggling to cover regular bills and debts in January, while five-and-a-half million fell behind or missed payments on at least one domestic bill or credit commitment in the six months running up to January. While these figures are an improvement on a year earlier, the number of people struggling to pay bills remains higher than in February 2020 – before the cost-of-living squeeze began – signalling that finances remain strained for some.”

Danni Hewson, head of financial analysis at AJ Bell, said: “Any growth is good news, and certainly the UK seems to be trudging slowly out of last year’s short-lived recession. But at 0.1% in February and even with the upwardly revised 0.3% in January, UK growth looks pretty pitiful when you compare it to the economic picture on the other side of the pond.

“The impact of rain on GDP explains why we Brits are so preoccupied with the weather. All those downpours dampened spirits and kept shoppers tucked up in their homes. Construction work slowed once again, and the rain undoubtedly played a part here, but it wasn’t the whole story.

“Housebuilders have taken a good look at the ever-changing interest rate picture and decided to keep their powder dry. Slowing supply to a trickle keeps prices elevated, and even though many costs have come down, labour is still proving an expensive and sometimes illusive consideration.”

Related: Mortgage lending supply and demand rose in Q1 2024