UK Prime Minister Rishi Sunk has said that confidence is returning to the country’s economy following official figures that showed the economy grew by more than expected in January. The economy expanded by 0.3% in January, bouncing back from a sharp fall in December. This data confirms that the government’s plan is the right one, and the UK needs to stick to it, said Sunak. The figures came ahead of next week’s Budget announcement when the Prime Minister will outline the government’s growth plans.
The January growth was driven by higher school attendance and the return of Premier League football after the World Cup. School attendance increased as more children returned to the classroom after the Christmas holidays, following a spike in winter flu, Covid-19, and Strep A. This was deemed to increase the output of the education sector, which grew by 2.5% in January. The ONS also highlighted that activity in arts, entertainment, and recreation also grew, mainly due to the return of Premier League football. However, the figures showed a fall in output in both the manufacturing and construction sectors.
Rachel Reeves, Labour’s shadow chancellor, argued that the economy is still “inching along” the path of managed decline. Nevertheless, Mr. Sunak said that the data showed the economy is “better than people had feared”. The ONS data also indicated that the economy stagnated between November and January compared to the previous three months.
The UK reported flat growth between October and December, and Goldman Sachs expects flat growth to continue in the first three months of this year. While a formal recession is avoidable, the overall trend in the economy is flat, with tax rises and the full effect of higher interest rates to come. The Bank of England has raised interest rates to 4% to curb inflation, which remains at its highest level for nearly four decades, leading to a squeeze on the cost of living.
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.