UK no longer in recession as Q1 GDP grows 0.6%

The UK is no longer in recession, according to data released on Friday by the Office for National Statistics.

GDP grew by 0.6% in the first quarter of this year, ahead of expectations for 0.4% growth. This means the UK is no longer in recession following two consecutive quarters of declines at the end of last year, when GDP shrank by 0.1% in the third quarter and 0.3% in the fourth.

Output in the services sector grew 0.7%, while production sector output grew 0.8% and the construction sector saw a 0.9% fall.

ONS director of economic statistics Liz McKeown said: "After two quarters of contraction, the UK economy returned to positive growth in the first three months of this year.

"There was broad-based strength across the service industries with retail, public transport and haulage, and health all performing well. Car manufacturers also had a good quarter. These were only a little offset by another weak quarter for construction.

"In the month of March the economy grew robustly led, again, by services with wholesalers, the health sector and hospitality all doing well."

Ruth Gregory, deputy chief UK economist at Capital Economics, said: "The 0.6% q/q rise in GDP in Q1 confirmed that the recession ended at the start of this year and lends support to our view that the recovery will be stronger than most forecasters anticipate.

"Even so, at this stage we doubt the recovery will be strong enough to prevent inflation from falling further and the Bank from cutting rates to 3.00% next year."