March’s low auto and retail sales, coupled with labor disruptions, lowered economic output.
According to official data, the British economy grew marginally in the first three months of the year but contracted in March.
In the three months leading up to March, the Office of National Statistics (ONS) recorded growth of 0.1%, the smallest quantity that could still be considered growth, as IT and construction sector activity offset the impact of strikes.
However, the economy contracted by 0.3% in March as retail and auto sales plummeted and public sector strikes were more disruptive than in February, with NHS workers and teachers participating in walkouts.
Also contributing to the contraction was a 0.5% decline in service production. Distribution and retail also had a dismal month as consumers experienced the cost of living pressures.
According to the economic research firm Pantheon Macro, the United Kingdom is lagging behind the G7 group of the world’s seven largest economies.
“The United Kingdom is the only G7 nation where the primary quarterly measure of GDP has not yet recovered to its pre-COVID peak; it was 0.5% below its Q4 2019 level in Q1,” the chief economist at Pantheon Macro said.
“This is primarily due to households’ real spending, which was 2.3% below its level in Q4 2019.” “At least the magnitude of the underperformance is not increasing relative to other European nations that have experienced a comparable energy price shock,” said Samuel Tombs.
ONS releases monthly GDP data, which stands for gross domestic product, and measures the aggregate total of all economic output.
Greater economic growth results in greater tax revenues, as well as likely higher incomes and living standards.
As part of his emphasis on economic development, Prime Minister Rishi Sunak asserts that economic expansion will generate better-paying jobs and more opportunities throughout the nation.
A quarter of economic development indicates that the United Kingdom is on track to avoid recession. However, the growth observed is modest.
Two consecutive quarters of negative economic growth constitute a recession, although the Bank of England anticipates the United Kingdom will avoid recession this year.
The announcement today follows a stagnant economy in February and 0.5% growth in January.
In response to the data, the Chancellor of the United Kingdom, Jeremy Hunt, stated, “It’s good news that the economy is expanding, but to achieve the government’s growth objective, we must maintain our focus on competitive taxes, labor supply, and productivity.
“Yesterday, the governor of the Bank of England confirmed that the budget represents an important beginning, but we will continue to work until we have the high wage, high growth economy we require.”
In response to today’s most recent GDP forecast, Rachel Reeves MP, Labour’s shadow chancellor of the Exchequer, stated, “Labour wants to match the ambition of the British people, whereas the Tories would rather continue on a path of managed decline with low growth and high taxes.
“Despite the enormous potential and promise of our nation, today is another day in the abysmal record of low growth maintained by this Conservative administration.
Families continue to feel worse off, and we are falling behind on the international stage.
Families in every region of our country will be better off as a result of Labour’s mission to secure the highest sustained growth in the G7.
