UK GDP: Recession recedes as UK grows faster than expected

UK GDP grew 0.4% in March, following a 0.2% rise in February, with growth in the first quarter of 0.6%, as a result the UK officially exited recession.

The growth was driven by broad based growth across the services sector, with good growth in manufacturing.

Services output grew 0.5% month-on-month, whilst construction output fell 0.4% month-on-month and production grew 0.2% month-on-month.

GDP had had been expected to rise 0.1% month-on-month and 0.4% in the quarter (Trading Economics).

Nicholas Hyett, Investment Manager at Wealth Club said, “An upgrade to February’s growth estimate and strong performance in March means the 2023 recession is rapidly receding in the rear view mirror  – ending almost as soon as it had started.

“Not only is the UK back in the black, but the economy is growing faster than expected. Perhaps most reassuring is the broad base of growth  – with positive developments across everything from retail to manufacturing.

“Construction remains the one area of weakness, particularly in the commercial sector. That’s no surprise. Real estate is particularly exposed to the effect of higher interest rates, and the upheaval of the pandemic is still rocking the office and retail sector – with increased home working and online shopping permanently changing demand. That’s not a trend that’s unique to the UK.

The Bank of England will be particularly pleased with itself looking at these numbers. With the economy looking healthy, a rate cut on Thursday would be looking premature now.