The UK economy rebounded in January, growing by 0.3%, according to new data from the Office for National Statistics (ONS) – reaffirming that the UK avoided recession at the end of last year.
The ONS said the largest contributors to GDP growth in annuary came from a bounce back in many sectors hit by strike action, including education and transport, along with entertainment and recreation.
The services sector was the main driver of the increase in GDP, driven by education, growing by 0.5% in January, after falling by 0.8% in December 2022.
The overall recovery in GDP comes after a fall of 0.5% in December after strike action and the cost of living crisis meant that output between October and December came in just shy of completing two consecutive quarters of growth, Sky News reported.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “Household spending has been holding up much better than expected despite soaring inflation, and this is propping services up. However, in the three months to January, GDP was flat and the construction sector is facing reasonably sharp contractions.
This tallies with the idea that the UK economy is going to shrink overall this year, even if a technical recession is avoided. The takeaway for businesses is unfortunately that things are going to remain very challenging, with stagnation a likely scenario for some time.”
