Kate Andrews

The economy grew by 0.1 per cent in February: not much to celebrate on its own but the small uptick in GDP all but confirms that the UK is leaving its recession in 2023. February wasn’t a booming month: services output only grew by 0.1 per cent, with transportation and storage services contributing the most to the sector’s growth (the former seeing its biggest boost since June 2020). The construction sector decreased by 1.9 per cent in volume terms, as the ‘fourth wettest February on record in England’ delayed projects. But a bounceback in production – the ‘largest contributor to the growth in GDP’ that month – provided some balance: overall production output grew by 1.1 per cent in February, recovering from a 0.3 per cent fall the previous month.

It was extremely optimistic to think the UK could revise its way out of recession. After the Office for National Statistics (ONS) reported GDP figures for Q4 last year showing a 0.3 per cent economic contraction between October and December, a recession seemed set in stone. Today the ONS reports no revisions to the figures. But even a small revision upwards would not have been enough to shake off the label of a recession. This remains a ‘technical recession’. Britain's economy fell – just – on the wrong side of the line last year. Had the Q3 figures not been revised downwards in December last year – from no growth to a contraction of 0.1 per cent – the UK would have dodged the definition of recession (two consecutive quarters of negative growth).

The Bank of England has voted to keep rates at 5.25 per cent – but there are signs that a rate cut may not be far off. The Monetary Policy Committee (MPC) voted 8-1 to hold the base rate. Yet there was a dovish shift in direction compared to the last meeting. In February, the MPC voted 6-3 to maintain rates, with two members voting to raise rates by 0.25 percentage points. Today, no one voted to raise rates – the first time this has happened since 2021. Instead, eight members voted to hold the base rate, while one member voted to reduce rates by 0.25 percentage points. It was widely expected that the Bank would vote to hold the rate. News earlier this week that inflation slowed again in February, to 3.

Is Britain’s economy ‘turning a corner’? Rishi Sunak thinks so, but convincing his fellow MPs and the public is going to be difficult. At the ‘SME Connect’ conference in Warwickshire this morning, the Prime Minister spoke about the ‘tough couple of years’ the country has been through, insisting the UK economy is now heading ‘in the right direction.’ Perhaps there is more to come in the way of tax cuts On several metrics, Sunak is right. January’s growth figures, coming in at 0.2 per cent, suggest the UK is likely to consign its technical recession to the end of last year.

Is the UK already out of recession? It’s a question that won’t be confirmed for months, but this morning’s update from the Office for National Statistics offers a positive hint that Britain’s economic contraction will be confined to 2023. According to the ONS, the economy grew by 0.2 per cent in January – thanks largely to improved services output, which rose by 0.2 per cent, and a bounceback in wholesale and retail trade. Construction output also turned a corner, growing by 1.1 per cent after three consecutive months of contractions. Is this the spectacular economic turnaround that Britain has been waiting for? GDP still fell 0.