The UK economy edged up by 0.1 percent in the first quarter despite an unexpected decline in March, official figures show.
The Office for National Statistics (ONS) said quarterly gross domestic product (GDP) growth was mainly driven by the construction and manufacturing sectors. However, strikes, weak car sales, and repairs contributed to a 0.3 percent GDP decline in March, despite forecasts of a flatlining economy during the month.
The unexpected contraction, following a flatlining economy in February, was driven by “widespread decreases across the services sector,” Darren Morgan, ONS director of economic statistics, said.
“Despite the launch of new number plates, cars sales were low by historic standards—continuing the trend seen since the start of the pandemic—with warehousing, distribution, and retail also having a poor month,” he added.
According to ONS figures published on May 12, production and construction output grew in March by 0.7 percent and 0.2 percent, respectively, but the growth was offset by a 0.5 percent fall in services.
Nine of the 14 services subsectors contracted, with wholesale, retail trade, and repair of motor vehicles declining by 0.14 percent, the biggest across all service sectors.
A decline in film, TV, and music production drove a 1.1 percent fall in information and communication industry output.
Survey results also suggested that strikes by junior doctors, civil servants, teachers, and rail workers in March may have had a “notable impact” on the sectors “of varying degrees.”
The declines were slightly offset by moderate growth in real estate activities and arts, entertainment, and recreation.
During the first quarter of the year, the UK’s GDP grew by 0.1 percent, slightly exceeding the zero percent forecast from the Bank of England (BoE).
The services sector grew by 0.1 percent in the three months to March 2023, driven by increases in information and communication, and administrative and support service activities—both of which decreased in March.
The construction sector grew by 0.7 percent during the quarter, while manufacturing grew by 0.5 percent. But there was no change in household consumption.
Chancellor of the Exchequer Jeremy Hunt said it’s a “good thing” that there has been growth in the GDP.
“But to reach the Government’s growth priority we need to stay focused on competitive taxes, labour supply, and productivity,” he said.
“The Bank of England Governor [Andrew Bailey] confirmed yesterday that the Budget has made an important start but we will keep going until the job is done and we have the high wage, high growth economy we need,” Hunt said.
The BoE on May 11 revised its economic forecast, projecting “modest but positive growth” instead of a “shallow but long recession” predicted six months ago.
Bailey said one of the reasons was that the measures recently introduced in the government’s budget will have “a positive effect.”
But Labour Party leader Sir Keir Starmer said the new GDP figure is “nothing to celebrate,” calling it “yet more low growth on the back of 13 years of low growth.”
“I think the essential question many people today will be asking themselves is, ‘Do I feel any better off now than I did 13 years ago when this Government started?’ I think the resounding answer to that around the country will be, ‘No, I don’t,’” Starmer said.
Noting the UK is “lagging behind other countries,” the Scottish National Party (SNP) blamed the “sluggish growth” on “Brexit, Tory cuts, and the UK Government’s atrocious mismanagement of the economy.”
It shows “why Scotland needs to escape Westminster control with independence,” SNP’s international trade spokesman Stewart Hosie said.
