The Bank of England has been proved wrong again as the British economy outperformed the Bank’s forecasts for the first three months of the year.
Quarterly real gross domestic product (GDP) rose by 0.1pc from January and March, according to the Office for National Statistics.
This matched the consensus expectation among economists of 0.1pc growth but exceeded the Bank of England’s forecasts of 0pc across the first quarter.
But on a monthly basis, GDP in March fell by 0.3pc. This was a far larger drop than the consensus forecast of 0pc growth.
The quarterly growth rate was front-loaded in January, when GDP rose by 0.5pc. In February, growth was flat.
The March data lays bare the impact of successive public sector strikes.
Darren Morgan, ONS director of economic statistics, said: “Across the quarter as a whole growth was driven by IT and construction, partially offset by falls in health, education and public administration, with these sectors affected by strikes.”
Without the impact of strikes, quarterly GDP growth in the first three months of the year would have been 0.2pc, the Bank said on Thursday.
Construction output rose by 0.7pc in the first three months of the year, which was the sixth consecutive quarter of positive growth.
The growth from January to March was driven by repair and maintenance, which grew by 4.9pc.
It comes after the Bank of England improved its outlook for growth in the UK economy by a record amount on Thursday as it raised interest rates to their highest level since 2008.
The rate-setting Monetary Policy Committee forecast that the economy will be 2.25pc larger in three years time than it predicted in February – the biggest growth upgrade in its history.
The Bank predicted a 0.2pc expansion for the first and second quarters only six months after predicting that the economy would not grow at all in 2023.
It also revised up its full-year forecast for 2023 to 0.25pc growth, compared to a prediction of a contraction of 0.3pc back in February.
The data showing a growth in the first quarter of 2023 comes after the UK economy narrowly avoided recession at the end of 2022.
The economy flatlined in the final three months of last year, having shrank by 0.3pc between July and September.
