Britain may already be out of recession

The UK economy appears set to emerge from a mild recession, according to official data released on Friday, with February seeing another month of growth after an upward revision to January's figures.

In February, GDP grew by 0.1% compared to the previous month, in line with economists’ expectations. In addition, growth for January was revised up from 0.2% to 0.3%, according to the Office for National Statistics (ONS).

The figures point to a stronger start to 2024 for the UK economy, with the average quarterly growth rate reaching 0.2% in February, compared with zero in January – the highest level since August.

The data is likely to confirm the Bank of England's cautious stance on potential interest rate adjustments, as the economy is on track to slightly beat the central bank's forecast with a 0.1% expansion in the first quarter of the year.

Britain entered recession in the second half of last year, leaving Prime Minister Rishi Sunak with the task of reassuring voters about the stability of the economy before an expected election later this year.

Chancellor of the Exchequer Jeremy Hunt welcomed the data, describing it as a sign that the economy was heading in the right direction. However, the opposition Labour Party, which leads the opinion polls, criticised the Conservative government, saying Britain had seen weak growth during its tenure.

Business surveys show growth continued in March. The Office for National Statistics suggests Britain could avoid recession even if GDP contracted sharply in March if no revisions are made to previous months’ data.

Despite signs of recovery, GDP remains below its level since June 2023, before the latest contraction, and has been largely stagnant since early 2022.

Compared to February 2023, economic output was 0.2% lower, slightly better than economists' expectations of a 0.4% lag.

In terms of sectors, services, the backbone of the economy, grew modestly by 0.1% in February, as expected. However, industrial production beat expectations and grew by 1.2% on a monthly basis. In contrast, the construction sector saw a notable decline of 1.9%, the biggest decline in more than a year.

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