Britain Emerges From Recession With January Growth Propelled by Construction Boom

March 13, London: According to the latest figures released by the Office for National Statistics (ONS), the U.K.GDP has experienced a slight increase of 0.2% in January followed by a 0.1% decline in December. This growth indicates that the British economy, which slowed in the latter half of last year, is making a shallow recovery.

The construction sector has been one of the most important contributors to this growth as it faced a remarkable rebound with growth of 1.1% in January. However, this was limited by a 0.9% decline over the past three months. The services sector, which is the most dominant sector in the UK, witnessed a 0.2% increase in January making a significant contribution to overall growth whereas the production output fell 0.2% over the same period.

Although registering a monthly growth consistently, The GDP was assessed to contract 0.3% compared with the same period last year with a 0.1% decline over the three months to January 2024.

In a conversation with CNBC’s “Squawk Box Europe”, Jack Meaning, Chief U.K. economist at Barclays while commenting on the figures said that, “not a hugely positive picture, but it’s ahead of where we were at the end of last year.”

He also stated that “Industrial and manufacturing have been weak for the last few prints, you’d expect some bounce-back from that in the end. This is good to see, but we’ll have to see it on a more prolonged basis to know that it is something sustained.”

James Smith, Developed Market Economist at ING, cited in a note that the latest figures are consistent with a forecast for a “gradual recovery in activity” in the coming months.

“We think the decline in overall fourth quarter GDP, which marked the second consecutive quarter of negative growth and therefore a technical recession, is unlikely to be repeated in the first quarter of 2024,” Smith added further.

Following the release by ONS, the British pound was slightly declined against the US dollar and the euro. This shows that although the growth in the figures gives some reassurance, yet the investors are still discreet about the macroeconomic outlook.