By David Milliken and Suban Abdullah
LONDON (Reuters) – The UK economy returned to growth in January after entering a shallow recession in the second half of 2023, official data showed, providing Prime Minister Rishi Sunak with some respite ahead of elections this year.
Gross domestic product grew 0.2 percent on the month – driven by a recovery in the retail and homebuilding sectors – after falling 0.1 percent in December, in line with expectations of economists in a Reuters poll.
Liz McKeown, director of the Office for National Statistics, said: “The economy rebounded in January with strong growth in retail and wholesale trade.” “Construction also performed well, with home builders having a good month after weakness for most of last year.”
However, it is too early to know whether the economy is no longer in recession. GDP contracted by 0.3% in the last quarter of 2023 and by 0.1% in the previous quarter – matching the technical definition of a recession.
The UK economy has been somewhat sluggish since its initial recovery from the Covid-19 pandemic, affected by the rising cost of energy imports due to the Russian invasion of Ukraine, and more recently higher bank interest rates from England.
But with inflation reaching 4% in January, below double-digit rates for most of last year, and expected to return to the 2% target soon, the pressure on household spending is easing and the central bank is beginning to consider when the time is right to cut interest rates. .
Source: Reuters
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