First quarter growth was revised slightly upwards

“British growth for the first quarter was revised slightly upwards on Friday: the United Kingdom's gross domestic product (GDP) grew by 0.7% between January and March, an increase compared to the first estimate of 0.6%,” the Office for National Statistics (ONS) announced.

The data confirmed that the country emerged from recession in the first quarter and that its economy is recovering faster than expected in the first quarter of 2023, good news for conservative Prime Minister Rishi Sunak just days before elections are expected to herald bad news for his party.

British GDP fell by 0.3% in the fourth quarter of 2023 and by 0.1% in the third quarter. However, two quarters of economic contraction in a row is generally considered by economists to be the definition of a so-called “technical” recession.

The upward revision of first-quarter growth came as a surprise, as economists had generally expected the first estimate to be maintained.

“Whoever is (elected) prime minister next week, he could benefit from a somewhat stronger economic recovery than our forecast,” Capital Economics analyst Paul Dales commented.

However, GDP stagnated in April – in line with forecasts – as unusually wet weather penalized the construction and retail sectors, the ONS reported in early June.

The Flash PMI index released last week by S&P Global, a leading indicator of growth, showed that private sector activity in the UK slowed in June, reflecting uncertainty in the business world, particularly as the general election on July 4 approaches.

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