The UK economy contracted by 1.5% in the first three months of 2021 but showed strong growth in March, according to new figures from the Office for National Statistics (ONS).
Across the first quarter, GDP shrank by 2.5% in January and then grew by 0.7% in February and 2.1% in March – the fastest monthly growth since August 2020.
“The strong recovery seen in March, led by retail and the return of schools, was not enough to prevent the UK economy contracting over the first quarter as a whole, with the lockdown affecting much of the services sector,” explained Darren Morgan, ONS director of economic statistics.
“However, construction grew strongly over the quarter and, in March, was above its pre-pandemic level.
“Manufacturing also recovered from an initial fall, increasing strongly in February and March, as businesses continued to adapt and make themselves Covid-19 secure.”
March’s GDP is still 5.9% smaller than in February 2020, before the first lockdown, and 1.1% below the initial recovery peak in October 2020.
But economists are optimistic that growth will continue over the course of the year.
“The first quarter should mark the low point for the economy in 2021,” said Tej Parikh, chief economist at the Institute of Directors.
“The lockdown, and added costs of navigating new trading terms with the EU, limited many businesses’ trading activities at the start of the year. Meanwhile, the vaccine rollout, extension of support measures at the Budget, and the roadmap to reopen the economy has helped build directors’ confidence for the months ahead.”