“UK GDP growth at 0.1% in Q1 2023, recovery remains fragile”

London (Reuters)

Data published by the Office of National Statistics in Britain yesterday showed that the country’s gross domestic product grew by 0.1 percent in the first three months of 2023, a period that was expected to form part of a long recession.
However, an unexpectedly sharp contraction of 0.3% in March showed that the recovery remains fragile. Economists polled by Reuters had expected an average growth on a quarterly basis of 0.1 percent, but they expected the pace of growth to remain steady in the last month of the quarter.
“The reason for the decline in March was due to widespread declines in the services sector,” said Darren Morgan of the Office for National Statistics.
The statistics office said the strikes also weighed on economic activity in the first quarter. The data shows that Britain’s economy is still 0.5 percent lower than it was in the last quarter of 2019 prior to the outbreak of the Corona epidemic, recording the lowest recovery among the economies of developed countries.
Yesterday, the Bank of England expected Britain’s economy to grow by 0.25 percent in 2023 as a whole, a slight increase but an improvement after the bank’s previous estimates indicated a contraction of 0.5 percent. Inflation in Britain exceeded 10 percent in March, which is twice the rate in the United States and higher than in eurozone countries.
The Bank of England raised its main interest rate a quarter of a percentage point to 4.5 percent on Monday and Governor Andrew Bailey said the British central bank would “stay the course” as it seeks to rein in inflation, which has hit the fastest pace among major economies. The bank expected wage growth to be greater than previously expected. “We have to stay on track to ensure that inflation falls back to the 2 percent target,” Bailey said, stressing that the Bank of England was not aiming to send any signals regarding its next steps, which would depend on the data.