Recession fears eased as economy returns to growth

The UK economy has made a faster recovery than expected, according to new figures released today.

The Office for National Statistics said GDP grew by 0.3 per cent during January, after shrinking by 0.5 per cent in December.

Some analysts had expected modest growth of just 0.1 per cent, as strike action and the cost of living crisis prevented a recovery in consumer and business activity.

A poor performance over Christmas, when widespread strikes combined with the cost of living crisis, meant output between October and December came in just shy of completing two consecutive quarters of negative growth.

The ONS said that the largest contributions to growth in January came from a bounce back in many sectors hit by the strikes, including education and transport, along with entertainment and recreation.

It also credited the return of top flight domestic league football following the end of the World Cup.

Raj Kandola (pictured), head of policy and strategic relationships at Greater Birmingham Chambers of Commerce, said: “It was pleasing to see that the economy returned to growth at the start of the year at a rate higher than many city analysts were forecasting.

“Much of this moderate expansion of growth was driven by a drop in wholesale gas prices and with inflation expected to fall throughout the year, the Treasury will be hoping to see a pickup in consumer spending as we approach the Spring.

“Nevertheless, there are still underlying causes for concern as supply chain disruption, rising inflation and labour market shortages continue to act as a break on further growth as evidenced in the data we collected for our latest Quarterly Business Report.

“With better-than-expected GDP figures, the Chancellor must use this fiscal headroom to outline a plan at next week 's Budget which will bolster business confidence and drive investment. ”

Greater Birmingham Chambers of Commerce will be publishing it 's pre-Budget asks early next week and will also provide full analysis on what the Spring Budget means for businesses.