UK economy rebounds in January to report 0.3% growth
The UK economy was estimated to have grown 0.3% in January 2023, spurred on by education, sporting events and the return of postal deliveries following strike action in December.
Gross domestic product (GDP) measures the value of goods and services produced in the UK. It estimates the size of, and growth in the economy.
The rebound follows a 0.5% fall in December 2022, the Office for National Statistics (ONS) revealed.
It said the largest contributors to growth came from education, transport, human health activities, as well as arts, entertainment and recreation activities.
The ONS noted that education grew 2.5% as school attendance levels returned to normal after a significant drop in December.
Meanwhile, there was a 6.4% increase in postal and courier activities, following a 10.4% slump in December due to the impact of postal strikes.
Elsewhere, arts, entertainment and recreation grew by 3.4% in January 2023, helped by the return of a full schedule for Premier League football after fixtures were postponed in December 2022 for the FIFA World Cup.
But on the flip side, production output fell 0.3%, construction fell 1.7% and real estate activities declined 0.1%.
Overall, the broader picture of GDP over the quarter remained flat.
Recession fears still real
According to Ruth Gregory, deputy chief UK economist at Capital Economics, the 0.3% rise in real GDP in January raises hopes that the economy will escape a recession in 2023.
It will also increase calls for the Chancellor to “splash the cash” in his Spring Budget next Wednesday.
“But the rise in GDP is not as good as it seems so we doubt it will give the Chancellor much wiggle room. And with the full drag from high interest rates yet to be felt, our hunch is still that the economy will enter a recession later this year,” Gregory said.