The UK’s exit from recession during the first three months of the year was stronger than initial figures suggested, according to official data.

In an update on its first growth estimate, the Office for National Statistics (ONS) said gross domestic product (GDP) rose by 0.7% between January and March.

It had originally said on 10 May that output was 0.6% up on the previous three months – a positive figure that brought to an end the shallow recession that struck during the second half of 2023.

Then, the effects of Bank of England interest rate rises to combat inflation were widely blamed by economists for choking of demand.

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All the growth during the January-March period was attributable to the services sector, which accounts for almost 80% of the economy.

We have since learned that there was zero growth recorded by the ONS for the month of April, with poor weather hitting construction and high streets.

The data is the last from the ONS before the country goes to the polls on 4 July – with the economy, and personal finances especially, among the topics high on voters’ minds following the effects of the COVID pandemic and energy-driven cost of living crisis.

The timing of the general election has coincided with fierce debate over whether the Bank should now be cutting interest rates, allowing for an easing in borrowing costs.

At its last policy meeting just over a week ago, the rate-setting committee voted 7-2 to maintain Bank rate at 5.25%.

The minutes of the meeting betrayed continuing worries about the pace of wage growth and stubborn inflation within services.

The Bank fears that a rate rise, at this stage, risks fuelling price growth further as basic salaries grow at a pace of 6%.

The rate of inflation is currently back at its 2% target for the first time in three years.

Despite this gap in favour of consumers, with wage growth outpacing inflation since June last year, the effects of the crises since 2020 have taken their toll, according to campaigners on living standards.

The Resolution Foundation said on Friday that real household disposable incomes were lower in early 2024 than they were back in late 2019.

It said that growth so far in this parliament was weaker than all but two parliaments since 1910, despite growth over the past year of 2.4%.

The thinktank declared that average incomes were £120 a year lower per person over the period since the last election.

Figures such as this get to the heart of the election campaign amid criticism of the main parties’ lack of clarity over their tax and spending commitments.

But they also give ammunition to critics of the Bank of England who argue that interest rates should come down.

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In its financial stability report on Thursday, there was a further nod to pressures ahead as it warned there were still three million mortgage holders yet to feel the pain of higher interest rates in their repayments.

As things stand, financial markets and economists see August or September as the likely months for the first rate cut, barring any new shocks.

For many, the prospect of action in June was largely eradicated by the election – the Bank anxious to avoid any questions over its independence.

Around three million UK households will see their mortgage repayments rise over the next two years as high interest rates continue to take effect, the Bank of England has said.

As many as 400,000 homes are likely to experience “very large increases” of more than 50%, its financial policy committee said.

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Interest rates have been brought to a near two-decade high of 5.25% in an effort to clamp down on price rises behind the cost of living crisis.

Inflation – the pace of price rises – had been at a 40-year high but now stands at the Bank’s 2% target as the high interest rates made borrowing more expensive and limited spending.

Despite the higher base interest rate set by the Bank, more than a third of mortgage holders (35%) are still paying a mortgage rate of less than 3%, the financial policy committee said on Thursday in its financial stability report.

This is because they signed up for a deal before the energy price shocks which resulted from the war in Ukraine.

Once those deals come to an end, households will have to sign up to a more expensive product.

Most mortgage holders, however, have repriced since mortgage rates started the cycle of increases late in 2021.

A typical household rolling off a fixed-rate mortgage before the end of 2026 is due to face a jump of around £180 a month, the report said.

It is the job of the financial policy committee to ensure the UK financial system can handle economic shocks and risks.

The body said UK lenders are still in a strong position to support homes and businesses, even if the economy worsens.

At present, interest rates are expected to come down in the coming months with a cut forecast for August, September, November and December.

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But consumers have been warned not to expect a return to the era of ultra-low interest rates.

The chief executive of the UK’s largest lender Charlie Nunn told Sky News the new normal is mortgage rates of 3.5% to 4.5%.

Multinational conglomerate Tata is set to shut the Port Talbot steelworks earlier than first announced over strike plans.

The company has said it will bring the final closure date to 7 July, from September, as Unite members at the steel plant were due to strike on 8 July.

Cutting emissions

One of the steel blast furnaces is to close at the end of this month in a push to reduce carbon emissions at what is the UK’s single largest source of CO2.

But that second closure looks set to take place next month, quickening the end of the plant and the loss of 2,800 jobs – 2,500 in the next year, a further 300 in three years.

It comes despite £500m of taxpayer cash to support the site’s transition to cheaper, greener steel production to cut emissions.

The previous fossil-fuel-powered blast furnaces are to be replaced by a single electric arc furnace.

Political intervention

Labour had pleaded with the company to hold fire on any closures before a new government is elected on 4 July.

Senior Labour figures including shadow Welsh secretary Jo Stevens had urged Tata to wait for a possible Labour government so fresh talks could take place.

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Unite general secretary Sharon Graham said: “Unite is fighting for the future of the steel industry. We have secured serious investment from Labour to safeguard jobs.”

Ms Graham described Tata’s move as being the “latest In a long line of threats that won’t deter us”.

“The Unite campaign is not about selling jobs, it’s about securing the long-term future of steel making in this country for thousands of workers in Port Talbot and South Wales. We call on the real decision-makers in Mumbai to take hold of this dispute, sit down, negotiate and realise that the investment secured will be good for the company and workers.”

The GMB union also voiced its support, saying “Tata must step back from this irreversible decision and safeguard steelmaking assets. There’s a general election in days that could change so much”.

A Tata Steel spokesperson said Unite’s strike announcement was made unilaterally and it is “unfortunately forced to commence legal action to challenge the validity of Unite’s ballot”.

“In the coming days, if we cannot be certain that we are able to continue to safely operate our assets in a stable fashion through the period of strike action, we will not have any choice but to pause or stop heavy end operations (including both blast furnaces) on the Port Talbot site.

“That is not a decision we would take lightly, and we recognise that it would prove extremely costly and disruptive throughout the supply chain, but the safety of people on or around our sites will always take priority over everything else.

“The company again calls for Unite to withdraw its industrial action and join Community and GMB unions in giving consideration to the company’s proposed memorandum of understanding, which puts forward a wide-ranging proposal including generous employee support packages, training and skills development.”