UK climbs out of recession but growth still lacklustre
10 May 2024
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In the Media
In the Media
Economic Theory
25 June 2024
Commenting on news that the UK’s economy exited recession after GDP grew by 0.6% in the first quarter of 2024, Julian Jessop, Economics Fellow at the free market think tank, the Institute of Economic Affairs, said:
“The 0.6% bounce in GDP in the first quarter of the year means that the UK economy has officially exited recession, which should boost consumer and business confidence and prompt a wave of upward revisions to forecasts for 2024.
“Nonetheless, the numbers are still little to get excited about. The first quarter figures were flattered by a big boost from net trade, as imports fell by more than exports, and by the favourable comparison with the weak figures in the second half of last year. Consumer spending only grew by 0.2%. GDP per capita rose by 0.4%, but remains 0.7% lower than a year earlier.
“Growth should continue over the rest of the year, albeit at a slower pace. Inflation is set to fall further and the slightly better GDP figures for the first quarter are unlikely to deflect the Bank of England from cutting rates. The business surveys that signalled a decent bounce in the first quarter were still strong at the start of the second.
“But the UK economy is still grappling with big problems. An even bigger state – with higher spending, higher taxes and more intervention – is not the solution.”
ENDS
Notes to Editors
Contact: media@iea.org.uk / 07763 365520
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
“The 0.6% bounce in GDP in the first quarter of the year means that the UK economy has officially exited recession, which should boost consumer and business confidence and prompt a wave of upward revisions to forecasts for 2024.
“Nonetheless, the numbers are still little to get excited about. The first quarter figures were flattered by a big boost from net trade, as imports fell by more than exports, and by the favourable comparison with the weak figures in the second half of last year. Consumer spending only grew by 0.2%. GDP per capita rose by 0.4%, but remains 0.7% lower than a year earlier.
“Growth should continue over the rest of the year, albeit at a slower pace. Inflation is set to fall further and the slightly better GDP figures for the first quarter are unlikely to deflect the Bank of England from cutting rates. The business surveys that signalled a decent bounce in the first quarter were still strong at the start of the second.
“But the UK economy is still grappling with big problems. An even bigger state – with higher spending, higher taxes and more intervention – is not the solution.”
ENDS
Notes to Editors
Contact: media@iea.org.uk / 07763 365520
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. The IEA is a registered educational charity and independent of all political parties.
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