UK no longer in recession, official figures show, as ‘confident’ Sunak insists economy has ‘real momentum’
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”.
He told Sky News’s Ed Conway: “I am pleased that while there’s more work to do, today’s figures show that the economy now has real momentum, and I’m confident that with time, people will start to feel the benefits of that.
“We’ve had multiple months now where wages are rising, energy bills have fallen, mortgage rates are down and taxes are being cut… I’m pleased with the progress that we’re making.”
Mr Sunak added: “I am confident the economy is getting healthier every week.”
Pic: Jacob King/PA
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?
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.
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.
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PM: ‘UK economy has real momentum’
“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.”
Sarah Olney MP, Treasury spokesperson for the Liberal Democrats, added: “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.”
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‘Path is downwards’ on interest rates
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.
Politics
Shouts of ‘genocide’ in Commons as David Lammy denounces Israel’s ‘intolerable’ actions in Gaza
The foreign secretary has denounced Israel’s actions in Gaza as “intolerable” but stopped short of saying it had committed genocide.
MPs could be heard shouting “genocide” in the Commons chamber as David Lammy announced the government was suspending its trade negotiations with Israel and summoning Tzipi Hotovely, Israel’s ambassador to the UK, to the Foreign Office.
The UK has also sanctioned a number of individuals and groups in the West Bank which it says have been linked with acts of violence against Palestinians – including Daniella Weiss, a leading settler activist who was the subject of Louis Theroux’s recent documentary The Settlers.
Politics latest: Starmer says sorry for being ‘overly rude’ at PMQs
Israel immediately criticised the UK government actions as “regrettable” and said the free trade agreement talks, which ministers have now backed out of, were “not being advanced at all by the UK government”.
Oren Marmorstein, a spokesperson for the Israeli foreign affairs ministry, said: “If, due to anti-Israel obsession and domestic political considerations, the British government is willing to harm the British economy – that is its own prerogative.”
Mr Lammy’s intervention came in response to Israel ramping up its latest military offensive in Gaza and its decision to limit the amount of aid into the enclave.
Tom Fletcher, head of the UN Office for the Coordination of Humanitarian Affairs, accused Israel of “deliberately and unashamedly” imposing inhumane conditions on Palestinians by blocking aid from entering Gaza more than 10 weeks ago.
He also told the UN’s security council last week that it must “act now” to “prevent genocide” – a claim that Israel has vehemently denied.
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Aftermath of strike on Gaza school-turned-shelter
Speaking in the Commons, the foreign secretary said the threat of starvation was “hanging over hundreds of thousands of civilians” and that the 11-week blockade stopping humanitarian aid reaching Gaza was “indefensible and cruel”.
Israeli Prime Minister Benjamin Netanyahu has agreed to allow a limited amount of aid into the besieged enclave in response to global concern at reports of famine.
Mr Lammy said Mr Netanyahu’s govenrment was “isolating Israel from its friends and partners around the world, undermining the interests of the Israeli people and damaging the image of the state of Israel in the eyes of the world”.
“We are now entering a dark new phase in this conflict,” Mr Lammy added.
“Netanyahu’s government is planning to drive Gazans from their homes into a corner of the strip to the south and permit them a fraction of the aid that they need.”
Referring to one of the far-right ministers in Mr Netanyahu’s government, he said Bezalel Smotrich “even spoke of Israeli forces cleansing Gaza, destroying what’s left of residents, Palestinians being relocated, he said, to third countries”.
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Surgeon compares Gaza to ‘killing fields’
MPs from across the house shouted “genocide” as Mr Lammy said: “We must call this what it is. It is extremism. It is dangerous. It is repellent. It is monstrous and I condemn it in the strongest possible terms.”
In the Commons, a number of Labour MPs urged the government to go further against Israel.
Yasmin Qureshi, the Labour MP for Bolton South and Walkden, said there needed to be a “full arms embargo” and said: “Can I ask the foreign secretary what additional steps he’s going to be taking in order to stave off this genocide?”
Another Labour MP told Sky News that while the statement was “better than previously…without a concrete timeline and a sanctioning of responsible ministers, it’s hard to know what tangible difference it will make.”
Read more:
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Gaza at mercy of what comes next – analysis
How Israel has escalated Gaza bombing campaign
Listen to The World with Richard Engel and Yalda Hakim every Wednesday
Israeli officials have said its plans to seize all of Gaza and hold it indefinitely. – which would move the civilian population southward – will help it achieve its aim of defeating Hamas.
Israel also believes the offensive will prevent Hamas from looting and distributing humanitarian aid, which it says strengthens the group’s rule in Gaza.
Mr Netanyahu has defended Israel’s actions in Gaza and reacted angrily to a joint statement penned by the leaders of the UK, France and Canada, in which they urged Israel to end its military offensive in Gaza and lift restrictions on humanitarian aid allowed into the enclave.
The Israeli prime minister said: “By asking Israel to end a defensive war for our survival before Hamas terrorists on our border are destroyed and by demanding a Palestinian state, the leaders in London, Ottawa and Paris are offering a huge prize for the genocidal attack on Israel on October 7 while inviting more such atrocities.
“No nation can be expected to accept anything less and Israel certainly won’t. This is a war of civilisation over barbarism. Israel will continue to defend itself by just means until total victory is achieved.”
US Securities and Exchange Commission (SEC) Paul Atkins appeared before lawmakers in one of his first hearings since becoming chair of the financial regulator, addressing questions about his plans for the cryptocurrency industry.
In a May 20 hearing discussing oversight of the SEC, Atkins reiterated his pledge to make regulating digital assets a “key priority” while chair. In response to questions from North Carolina Representative Chuck Edwards, the SEC chair did not directly answer how much of the regulator’s funds were used to support the crypto task force headed by Commissioner Hester Peirce, and said its findings were “still under development.”
“We should be having something here in the next few months with proposed steps forward,” said Atkins in response to the task force’s first report.
The SEC chair’s appearance at the oversight hearing was one of his first since being sworn into office in April. Nominated by Donald Trump, Atkins, also a former commissioner, was seen by many lawmakers and those in the digital asset industry as someone who could radically change the SEC’s approach to crypto.
Looking to Congress for help with regulatory clarity
Atkins’ remarks came less than 24 hours after US Senators voted to move forward on consideration of a bill to regulate stablecoins, the Guiding and Establishing National Innovation for US Stablecoins Act, or GENIUS Act. The bill is one of many related to aspects of digital assets that could affect how the SEC regulates the industry alongside agencies like the Commodity Futures Trading Commission (CFTC).
“Whatever happens in Congress […] that will help undergird what we do,” said Atkins.
Related: Paul Atkins: ‘Crypto markets have been languishing in SEC limbo’
Since being sworn into office in April, the SEC chair has given opening remarks and overseen the commission’s roundtable events on digital assets. The next event, scheduled for June 9, will have SEC commissioners and industry leaders discuss issues related to decentralized finance.
Magazine: SEC’s U-turn on crypto leaves key questions unanswered
Politics
Suspension of trade talks a political signal that Israeli leadership is increasingly isolated
The UK has suspended trade talks with Israel, in protest at what David Lammy called the “intolerable” conditions in Gaza, which he said would leave the population at risk of starvation.
This is, the foreign office confirms, a UK first, in suspending trade talks for a political or humanitarian reason. The Israeli ambassador in London, Tzipi Hotovely, will be summoned to the Foreign Office to deliver the message.
Politics live: PM apologises for being ‘overly rude’ at PMQs
This suspension, with immediate effect, is a political signal that the Israeli leadership is increasingly isolated even among its allies; and intended to ratchet up the pressure to let aid in.
It comes with a step change in the UK’s language on the humanitarian situation.
Keir Starmer on Monday night, in his joint statement with French President Emmanuel Macron and Canadian Prime Minister Mark Carney, said there would be “concrete steps” if food and medicine continued to be held up at borders; and this is one of the levers available.
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Doctors in Gaza plead for help
David Lammy, announcing the move and targeted sanctions against West Bank settlers linked to violence, called it a “dark phase” in the conflict and said: “[Benjamin] Netanyahu’s actions have made this necessary.”
Trade talks were launched under Rishi Sunak’s government, and a 2030 Roadmap was agreed for boosting trade.
Gaza live: UK halts trade talks with Israel
But although the Labour government committed to continuing with it, the last round of talks was held more than a year ago.
Israel has, the UN say, not allowed trucks in for 11 weeks, after saying Hamas steal the aid intended for civilians. Some trucks entered on Tuesday, but aid agencies say it is nowhere near enough.
With the collapse of the latest talks between the two sides in Qatar last week, the ceasefire the UK is calling for looks far off.
Using economic measures to force the aid issue is likely to be a signal to other allies, including the European Union, to take similar steps.
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