Britain’s economic system grew by 0.1% within the first three months of 2023, a interval that was as soon as anticipated to be a part of an extended recession, however an unexpectedly sharp 0.3% drop in March underscored how fragile its restoration stays.
Economists polled by Reuters had principally forecast 0.1% quarterly progress, however that they had anticipated output to carry regular within the ultimate month of the quarter.
“The autumn in March was pushed by widespread decreases throughout the providers sector,” mentioned Darren Morgan, from the Workplace for Nationwide Statistics.
“Regardless of the launch of latest quantity plates, automotive gross sales have been low by historic requirements – persevering with the development seen for the reason that begin of the pandemic – with warehousing, distribution and retail additionally having a poor month.”
Widespread industrial motion additionally weighed on financial exercise within the quarter, the ONS mentioned.
Britain’s economic system remained 0.5% smaller than within the fourth quarter of 2019, shortly earlier than the coronavirus pandemic – a weaker rebound than every other main superior economic system.
“With the important thing providers aspect of the economic system persevering with to sluggish within the face of upper borrowing prices and rising costs, it nonetheless seems like we’re strolling by means of treacle,” mentioned Tom Stevenson, private investing director at Constancy Worldwide.
“With inflation nonetheless in double digits, it feels depressingly like a re-run of Nineteen Seventies stagflation.”
Output in March was solely 0.1% increased than in February 2020, the final full pre-pandemic month.
“A weaker economic system in March underscores its fragility regardless of a fall in wholesale vitality costs, bettering provide chain situations, and shopper confidence that has additionally recovered from multi-year lows,” KPMG economist Yael Selfin mentioned.
“Whereas recession might be not on the playing cards, vulnerabilities ensuing from increased borrowing prices and tighter credit score are more likely to dampen enterprise and family exercise this yr.”
The Financial institution of England forecast on Thursday that Britain’s economic system would develop 0.25% in 2023 as a complete – a weak enlargement however an improve on its earlier prediction of a 0.5% contraction.
Britain’s inflation price topped 10% in March – double the extent in the USA and better than the euro zone’s too – and it is usually scuffling with a good labor market, a string of rate of interest hikes and after-effects of Brexit.
Finance minister Jeremy Hunt mentioned after the information that it confirmed the necessity for the federal government “to remain targeted on aggressive taxes, labor provide and productiveness”.