UK economy grows defying the Bank of England’s recession fears

The UK economy grew by 0.3 percent in January, the Office for National Statistics (ONS) has found.

The new figures mean that GDP has returned to growth in 2023 following several rocky months that led it to stall in the final quarter of 2022, with a noted 0.5 percent contraction in December.

The Government will likely count the figures as a win, with less than one week to go until Jeremy Hunt delivers his spring budget.

Mr Hunt has cautiously hailed the figures, as he has warned that there is a “long way to go” with the economy.

He said: “In the face of severe global challenges, the UK economy has proved more resilient than many expected, but there is a long way to go.

“Next week, I will set out the next stage of our plan to halve inflation, reduce debt and grow the economy – so we can improve living standards for everyone.’’

ONS officials have slightly tempered the figures as, despite being positive, they note the UK’s economy as a whole continues to struggle.

The 0.3 percent growth shows a “partial” bounceback from recent stagnation, but according to Darren Morgan, the ONS director of economic statistics.

Considering the year as a whole, the UK’s economy has not grown, he said.

Mr Morgan said that, considering the last three months “as a whole” and preceding year, the economy has shown “zero growth”.

He added: “The main drivers of January’s growth were the return of children to classrooms, following unusually high absences in the run-up to Christmas, the Premier League clubs returned to a full schedule after the end of the World Cup and private health providers also had a strong month.

“Postal services also partially recovered from the effects of December’s strikes.”

Officials added that the growth follows a GDP fall of 10.5 percent in December 2022, driven partially by the impact of the year’s postal strikes.

The ONS found that transport and storage services were among the sectors that experienced the most growth in January.

They both grew by 1.6 percent earlier this year, buoyed by an increased output of 6.4 percent in postal and courier activities.

Government officials have signalled hopes that the UK’s economy can grow further than today’s rate.

Speaking to Times Radio this morning, Foreign Secretary James Cleverly said he remembered “it wasn’t that long ago we were predicted in a heavy recession”.

He said the Government would “like to see greater growth figures”, but added the economy is held back by “huge international economic headwinds”, with the Russian invasion of Ukraine having pushed up fuel and food prices.

These, he said, have had a “dragging effect” on the economy.

In a bid to boost the economy further, the Chancellor’s budget next week will reportedly extend the £2,500 energy bills cap on energy bills for three months.