UK economy to accelerate in early 2024

By David Milliken

LONDON (Reuters) – The United Kingdom's economy emerged from recession faster than previously thought in the first three months of the year, revised official data showed on Friday, but the economic outlook remains fragile ahead of next week's election.

The Office for National Statistics said Britain’s gross domestic product grew by 0.7% in the first three months of the year compared with the previous quarter, exceeding the initial estimate of 0.6%. GDP fell for two consecutive quarters in the second half of 2023.

These figures were published less than a week before the British vote in elections. Opinion polls indicate that the Labor Party, led by Keir Starmer, will easily defeat the Conservative Party led by Prime Minister Rishi Sunak.

Longer-term growth prospects are weak, contributing to Sunak’s electoral difficulties. Compared with the same quarter last year, GDP grew by just 0.3%, above the initial estimate of 0.2%.

Real household disposable income – a measure of the standard of living – was 0.6% lower per capita in the first quarter of 2024 than in the last quarter of 2019, which was the time of the last national election in the UK and just before the Covid-19 pandemic. .

“Resolving this massive contraction in living standards is the ultimate test of who wins the election,” said Adam Corlett, an economist at the Resolution Foundation.

The UK economy has been struggling since the last election, hampered not only by the pandemic – which has dealt a lasting blow to the workforce – but also by rising inflation in the wake of Russia’s invasion of Ukraine and post-Brexit trade frictions.