The British economy rebounded slightly in January, data showed on Wednesday, providing a boost for embattled Chancellor Rishi Sunak ahead of an election and raising hopes of an end to the recession.
The Office for National Statistics (ONS) said gross domestic product (GDP) increased by 0.2%, following a 0.1% decline in December.
The news sparked hopes that the UK could be on track to emerge from the technological recession that plunged it into the second half of last year in the first quarter.
Liz McCune, director of economic statistics at the ONS, said: “The economy improved in January, driven by strong growth in retail and wholesale trade.”
“Construction is also doing well, with home builders having a strong month after being weak most of last year.”
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This positive news comes as the economy contracted in both the third and fourth quarters of 2023, meeting the technical definition of a recession against a backdrop of rising inflation, high interest rates and a cost of living crisis. It was announced later.
Following Wednesday’s figures, the Conservative government’s finance minister, Jeremy Hunt, added: “It’s been a tough few years, but today’s numbers show economic growth is making progress.”
However, the ONS added that GDP fell by 0.1% in the three months to January compared to the three months to October.
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KPMG UK economist Yael Selfin said the figures showed “the UK economy is likely to have emerged from recession, but the outlook remains weak”.
“Economic activity has picked up and the year started with a relatively broad recovery across sectors.
“While economic performance has improved somewhat, the outlook remains relatively bleak. The lingering effects of high interest rates have dampened demand, and economic growth is not expected to pick up significantly this year.”
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Sunak’s Conservative Party is lagging behind Keir Starmer’s main opposition Labor party ahead of this year’s general election.
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