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The UK economy grew slightly in March, raising hopes that it is on the way to a recession.
The economy grew by 0.1%, official figures show, boosted by production and output in areas such as the auto industry.
The Office for National Statistics (ONS) said construction had been slowed by wet weather.
This is an early estimate, but it shows how the UK, which went into recession at the end of 2023, is progressing.
Liz McKeown, director of economic statistics at the ONS, said that looking at the three months to February as a whole, the economy grew for the first time since last summer.
‘turning the corner’
Chancellor Jeremy Hunt suggested the new figures were a “welcome sign that the economy is turning around”.
“We can build on this development if we stick to our plan,” he added.
Growing the economy was one of five key pledges Prime Minister Rishi Sunak made last year as consumers and businesses were squeezed by high prices and rising interest rates.
However, Labour’s shadow chancellor Rachel Reeves argued that “Britain is worse off with low growth and high taxes”.
He added: “The Conservatives can’t fix the economy because that’s what broke it.”
Most economists, politicians and businesses like to see the gross domestic product (GDP) steadily rising because it usually means more spending, more jobs, more taxes and more is paid and workers receive better wages.
The official statistics agency also revised up its preliminary estimate of gross domestic product (GDP) in January from 0.2% growth to 0.3%.
In February, output from the UK manufacturing industry led economic growth, rising by 1.1%, compared to a fall of 0.3% in January.
The construction sector saw output fall by 1.9% even as incessant rain hampered construction projects.
The services sector, which includes things like hairdressing and hospitality, also grew slightly with public transport and goods goods having a strong month.
Yael Selfin, chief economist at KPMG UK, said that January’s overall figures give a strong indication that the recession, defined as an economy that has been in recession for two to three months in order, may be finished.
Growth is likely to be boosted by a reduction in National Insurance and lower inflation, meaning businesses and households will have more confidence in their finances and spending.
But he added that consumer spending remains weak and business investment could be dampened by general election uncertainty.
Andrew Watson is chief financial officer at Goodfellow, a Cambridge-based steel manufacturer that provides global research and development.
He said that last year the factory was affected by the disruption of cruise ships in the Red Sea and supply chains were tight after the outbreak, “but overall we saw growth”.
“You have this strange combination of an economy that is underperforming in terms of GDP and yet we feel like we have opportunities to grow – and we have to move forward and access those opportunities,” he said.
He suggested that UK growth has been “anaemic” since covid, with more opportunities emerging in the United States.
Economies in other countries are also facing energy price shocks and supply chain delays due to the cost-raising pandemic, as well as potential fallout from overseas conflicts, but The UK has seen growth slow for a long time.
‘Industries are struggling’
Dr Roger Barker, director of policy at the Institute of Directors, suggested that there were few signs of “strength” in the UK economy and that some sectors of the service industry such as hotels and hospitality were struggling.
Some economists have pointed to the impact of recent interest rate hikes by the Bank of England on the economy.
Currently, experts are divided on whether the UK’s central bank can start to cut interest rates in the summer, which is an opportunity to provide relief to borrowers and lenders.
The Bank’s Monetary Policy Committee takes into account a range of economic figures when deciding on its base rate, although monthly figures such as February’s are subject to change and are “unlikely” to make a big change in its thinking, said Danni Hewson, head. of auditing at AJ Bell.
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