The UK economy is no longer in recession, according to official figures.

Gross domestic product (GDP) grew by a better-than-expected 0.6% between January and March, the Office for National Statistics (ONS) said.

Economists had predicted the figure would be 0.4%.

Prime Minister Rishi Sunak said it showed the economy had “turned a corner”, adding: “We know things are still tough for many people, but the plan is working, and we must stick to it.”

A recession, which is defined as two consecutive three-month periods where the economy contracts, was declared in February.

It came after the ONS said GDP, a major measure of economic growth, shrank 0.3% between October and December. It followed a contraction of 0.1% in the three months from July to September.

The slump was blamed on reduced consumer spending power amid high inflation and energy bills. Months of wet weather also contributed to keeping shoppers at home, commentators said.

The latest figures also revealed better-than-expected growth for March. GDP was up 0.4% during the month, which was higher than the 0.1% forecast by economists.

GDP growth figures for February were also revised upwards by the ONS, from 0.1% to 0.2%.

While previous recessions have been long-lasting – such as during the global financial crash of 2008 and 2009 – the latest one had been expected to be short-lived.

Recession over with a bang – but will voters forgive government?

Ed Conway

Economics and data editor

@EdConwaySky

Britain is not just out of recession. It is out of recession with a bang.

The economic growth we saw reported this morning by the Office for National Statistics is not just faster than most economists expected, it is the fastest growth we’ve seen since the tail-end of the pandemic when the UK was bouncing back from lockdown.

But, more than that, there are three other facts that the prime minister and chancellor will be gleeful about (and you can expect them to be talking about this number for a long time).

First, it’s not just that the economy is now growing again after two-quarters of contraction (that was the recession).

An economic growth rate of 0.6% is near enough to what economists used to call “trend growth”, back before the crisis – in other words, it’s the kind of number which signifies the economy growing at more or less “normal” rates.

And normality is precisely the thing the government wants us to believe we’ve returned to.

Second, that 0.6% means the UK is, alongside Canada, the fastest-growing economy in the G7 (we’ve yet to hear from Japan, but economists expect its economy to contract in the first quarter).

Third, it’s not just gross domestic product (GDP) that’s up. So too is gross domestic product per head – the number you get when you divide our national income by every person in the country.

Read the full analysis here

Economy ‘returning to full health’

Chancellor Jeremy Hunt described the figures as “encouraging” and said it showed that the economy was “returning to full health”.

He told Sky News: “I think that for families who’ve been having a really tough time, this is an indication that difficult decisions that we’ve taken over recent years are beginning to pay off and we need to stick with them.

“We’re seeing that inflation is falling faster and I think people recognise it’s been a very, very challenging period, but they don’t vote for Conservative governments for us to do popular things.

“They trust us to do the right thing for the long-term benefit of the economy and that is what we’ve been doing.”

However, opposition parties said there was little cause for celebration.

Labour’s shadow chancellor Rachel Reeves said: “This is no time for Conservative ministers to be doing a victory lap and telling the British people that they have never had it so good.

“The economy is still £300 smaller per person than when Rishi Sunak became Prime Minister.”

Lib Dems Treasury spokesperson Sarah Olney MP said: “This Conservative Government crashed the economy and sent mortgages spiralling.

“If Rishi Sunak thinks hard-hit households will be celebrating today, he is even more out of touch than we thought.”

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Liz McKeown, the ONS’s director of economic statistics, said: “There was broad-based strength across the service industries with retail, public transport and haulage, and health all performing well.

“Car manufacturers also had a good quarter. These were only a little offset by another weak quarter for construction.

“In the month of March the economy grew robustly led, again, by services with wholesalers, the health sector and hospitality all doing well.”

Ruth Gregory, from research firm Capital Economics, said the figures suggested the UK’s economic recovery would be stronger than previously anticipated.

She added: “All the early indicators suggest that GDP growth rose robustly in April as well.

“At the margin, this may mean the Bank of England doesn’t need to rush to cut interest rates. But the timing of the first interest rate cut will ultimately be determined by the next inflation and labour market releases.”

The latest figures come after the Bank of England held interest rates at 5.25% on Thursday and issued new forecasts for the UK economy.

The Bank projected that growth would be stronger this year, with unemployment and inflation rates lower than previously expected.

Britain is not just out of recession. It is out of recession with a bang.

The economic growth we saw reported this morning by the Office for National Statistics is not just faster than most economists expected, it is the fastest growth we’ve seen since the tail-end of the pandemic when the UK was bouncing back from lockdown.

But, more than that, there are three other facts that the prime minister and chancellor will be gleeful about (and you can expect them to be talking about this number for a long time).

First, it’s not just that the economy is now growing again after two-quarters of contraction (that was the recession).

An economic growth rate of 0.6% is near enough to what economists used to call “trend growth”, back before the crisis – in other words, it’s the kind of number which signifies the economy growing at more or less “normal” rates.

And normality is precisely the thing the government wants us to believe we’ve returned to.

Second, that 0.6% means the UK is, alongside Canada, the fastest-growing economy in the G7 (we’ve yet to hear from Japan, but economists expect its economy to contract in the first quarter).

Third, it’s not just gross domestic product (GDP) that’s up. So too is gross domestic product per head – the number you get when you divide our national income by every person in the country.

After seven years without any growth, GDP per head rose by 0.4% in the first quarter. And since GDP per head is a better yardstick for the “feelgood factor”, perhaps this means people will finally start to feel better off.

But this is where the problems come in. Because while this latest set of GDP figures is undoubtedly positive, the numbers that came before are undoubtedly grim.

GDP per head is still considerably lower, in real terms, than it was in 2022, before the mini-budget, or for that matter lower than in early 2019.

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This raises another question: when people think about the state of the economy ahead of the election (and obviously these new figures are likely to increase the speculation about the date of the election), do they put more weight on the years of economic disappointment or the bounce back after them?

Do they focus on the fact that we’re now growing at a decent whack or on the fact that their income per head is, in real terms, no higher today than it was five years ago?

These are the questions we will all be mulling in the coming months – as the next election approaches.

One thing is for sure: this won’t be the last time you hear about these GDP numbers.

How soon is too soon?

That’s the question exercising members of the Bank of England‘s monetary policy committee (MPC) at the moment. All nine members know that interest rates, currently at 5.25%, will have to be cut in the coming months.

After all, high interest rates represent a brake on the economy and it’s becoming clear that keeping the brake pedal down is causing economic pain.

Money latest: Reaction as Bank of England holds off on rate cut

Unemployment is beginning to rise; the strength of consumer demand is dropping and, most of all, inflation is coming down too.

For Bank insiders, the fact that the rate at which the consumer price index is rising each year is about (at least according to their forecasts) to hit 2% is a mark of success.

Not long ago, as prices rose at the fastest rate in decades, many in the City wondered whether the Bank might have lost control of inflation – which it is supposed to keep as close as possible to 2%.

While the indicator’s fall is partly down to the volatility of energy prices (having been the main force lifting prices in recent years, they are now the main force depressing them), what gives the Bank’s policymakers hope is that while CPI inflation is expected to bounce back slightly in the coming months, their forecast suggests it will not exceed 3%.

The upshot is that inside the Bank there are some who are now whispering quietly that they might have succeeded – inflation might have been tamed.

But that brings us back to that question: if inflation is tamed then there’s no need to have interest rates so high, so how soon should they be cut?

Complicating factors is what’s happening on the other side of the Atlantic, where the Federal Reserve, America’s central bank, has committed something of a U-turn.

Having guided investors and economists a few years ago that an interest rate cut was coming soon, the Fed chair, Jerome Powell, has more lately hinted that no cut was coming anytime soon.

And since America usually leads the way on interest rates, that raises an unnerving question: can the UK really begin cutting rates so long before the Federal Reserve?

The Bank’s internal assessment is quite simply that the British economy is in a very different place to America. The US is growing very strongly indeed, partly thanks to large federal spending programmes pumping cash into green tech and semiconductor manufacturing.

There is nothing analogous in the UK, whose economy is expected to grow by 0.9% over the next 12 months or so.

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That’s an upgrade on the previous 0.6% forecast, but is only a fraction of the 2%+ growth enjoyed in the US.

In the coming weeks, we’re expecting an unusually important set of economic numbers. Inflation data for April is expected to show a big fall, down to 2%. There are some jobs data and, of course, tomorrow we learn whether the UK has bounced out of its current recession (it almost certainly has).

In the end, this data is what will determine whether the MPC is bold enough to cut rates in June or in August (or, if the data shows an unexpected increase in inflation, to put those cuts off for longer).

So it’s a waiting game. But it looks like there’s not that much longer to wait.