The UK economy returns to modest growth in early 2024

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% on the month – driven by a rebound in the retail and homebuilding sectors – after falling 0.1% 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.” “The construction sector 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, which meets 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. .