U.K. Economy Snaps Out of Recession with Unexpected 0.6% Growth Rate

The U.K. economy has emerged from a recession, with a growth rate of 0.6% in the first quarter of 2023. This figure is higher than expected, as economists had predicted a growth rate of 0.4%. Despite persistent inflation that had been negatively impacting the economy, the U.K.’s production sector expanded by 0.8% from January to March, while construction experienced a decline of 0.9%.

The Bank of England’s Monetary Policy Committee has stated that indicators of inflation persisting at elevated levels have resulted in the decision to keep the main interest rate at 5.25%. The central bank has forecasted that headline inflation will remain close to 2% in the short term but is expected to increase later in the year when the effects of a sharp decline in energy prices wear off.

While there is no official definition of a recession, it is generally understood as two consecutive quarters of negative growth. In this case, the U.K.’s production sector expanded by 0.8% from January to March, while construction experienced a decline of 0.9%. The overall economic growth for the month of March was at 0.4%, following a 0.2% expansion in February