Other data showed the economy performed better than initially measured between January and March, but attention is turning to sustaining the recovery as the clock ticks down to Thursday’s election.
The UK’s exit from recession in the first three months of the year was stronger than initial data suggested, according to official data.
In an update to its first growth estimate, the Office for National Statistics (ONS) said gross domestic product (GDP) rose by 0.7% between January and March.
It was originally said on May 10 production increased by 0.6%. over the previous three months – a positive number that ended the shallow recession that hit during the second half of 2023.
Economists then widely blamed the effects of the Bank of England’s interest rate hike on the fight against inflation for stifling demand.
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All of the growth between January and March was driven by the services sector, which makes up almost 80% of the economy.
We have since learned that it exists zero growth recorded the ONS for the month of April, bad weather hit construction and high streets.
The data is the latest from the ONS before the country goes to the polls on July 4 – with the economy, and personal finance in particular, among the topics on voters’ minds following the impact of the COVID pandemic and the cost of living caused by energy. crisis.
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The timing of the general election coincided with a fierce debate over whether the Bank should cut interest rates now, allowing borrowing costs to ease.
In its last policy meeting more than a week ago, the rate-setting committee voted 7-2 to keep the bank rate at 5.25%.
Minutes of the meeting revealed lingering concerns about the pace of wage growth and stubborn inflation in services.
The bank fears that raising rates at this stage risks further price rises, as basic pay rises at a rate of 6%.
Rate inflation is now back at its 2% target for the first time in three years.
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Despite this gap in favor of consumers, with wage growth outpacing inflation since June last year, living standards campaigners say the effects of the crises have taken their toll since 2020.
The Resolution Foundation said on Friday that real household disposable income was lower at the start of 2024 than at the end of 2019.
It said growth in this parliament so far had been weaker than in all but two parliaments since 1910, despite growth of 2.4% over the past year.
The thinktank said average incomes were £120 a year lower per person in the period since the last election.
“We don’t know if we’re going to vote to raise taxes or cut spending.”
Numbers like this will take center stage in the election campaign criticism of the main parties’ lack of clarity about their tax and spending commitments.
But they also give ammunition to Bank of England critics who say interest rates should fall.
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There was another nod to future pressures in her financial stability report on Thursday, which she warned still exist three million mortgage holders are yet to feel the pain higher interest rates when repaying them.
Currently, financial markets and economists see August or September as the likely months for the first rate cut, if there are no new shocks.
For many, the prospect of action in June has been largely eradicated by the election – the bank has sought to avoid any questions about its independence.