UK economy returns to growth

The UK economy has emerged from recession, according to the latest data.

Gross domestic product (GDP) grew by 0.6% between January and March, the Office for National Statistics (ONS) said.

This is the fastest growth for two years, and above the 0.4% predicted by economists.

It follows two quarters of contraction in the second half of 2023 as consumers cut back on spending amid high inflation and energy bills.

Services such as retail, public transport, haulage and health were the biggest driver of growth in the first three months of the year. Car manufacturers also had a good quarter.

This was offset slightly by another weak quarter for construction.

Continued growth is expected for the rest of the year, according to Yael Selfin, chief economist at KPMG UK.

“Falling inflation and real pay increases should help repair some of the damage to household incomes and support households’ consumption,” Selfin said. “Growth prospects have also improved in Europe, which could spur a recovery in exports.”

She added that “the worst is behind the UK economy”.