UK exits recession with 0.6% growth in March 2024 quarter | 10 key things to know

The United Kingdom’s economy recovered from depression, with the gross domestic product (GDP) growth re-entering the positive trajectory during the January-March 2024 quarter, as per the official data released on Friday, May 10.

The British economy grew by 0.6% year-on-year in the three-month period, as compared to a contraction of 0.3% in the final quarter or October-December period of 2023.

The numbers hint at a “turnaround” for the UK economy, which has been struggling since the onset of Covid-19 pandemic, said UK Prime Minister Rishi Sunak.

UK exits recession with positive GDP growth: 10 key points

• This marked the highest rate of GDP growth since the October-December quarter of 2021, when the economy had risen by 1.5% due to low-base effects.

• The growth rate clocked in the first quarter of 2024 has surpassed the analysts’ estimate. The Bank of England, the country’s central bank, had pegged the growth rate at 0.4%.

• In what further signalled a turnaround, the GDP during the month of March 2024 grew by 0.7% year-on-year, surpassing the analysts’ estimate of 0.3% growth.

• The positive growth rate, said experts, is the first major signal for the Bank of England to look at the possibility of reducing the rates in this fiscal year. The benchmark lending rates, at a 16-year high, are expected to be lowered only if the positive growth rate continues and the US Federal Reserve initiates the rate cut cycle.

• As per the data shared by the Office of National Statistics, retail, public transport, haulage and health were among the sectors that performed well. A growth was also seen in the automobile sector, but construction woes continued.

• "There is no doubt it has been a difficult few years, but today's growth figures are proof that the economy is returning to full health for the first time since the pandemic," UK Finance Jeremy Hunt said.

• Despite the cheer, a section of economists said the path to economic recovery remains long for the UK. “The improvement in GDP growth looks likely to be constrained by the ongoing weakness in productivity growth as well as reduced scope to increase employment levels,” news agency Reuters quoted Yael Selfin, chief economist at KPMG UK, as saying.

• Some economists said that the UK households have seen no meaningful improvement in their living standards over the last two years. The positive growth rate, in this quarter, would create an impact only if it improves the per-capita purchasing power, they pointed out.

• Notably, the UK economy was battered following the onset of the coronavirus pandemic. It has remained one of the slowest recovering major economies, with only Germany faring worse.

• The country’s economy, as compared to the pre-Covid period of 2019, has grown by only 1.7%.