Investing.com — The U.K. economy grew at a faster-than-anticipated pace in the first quarter, bringing an end to a technical recession that began last year.
Gross domestic product in the opening three months of 2024 came in at 0.6% on a quarter-on-quarter basis, a quicker rate than the 0.4% uptick economists had predicted.
The figure represents a potential boost for Prime Minister Rishi Sunak, who faces an expected election later this year. Sunak claimed the economy had “turned a corner.”
It was the strongest uptick in the U.K. economy since the fourth quarter of 2021, when it expanded by 1.5%. In the final quarter of last year, GDP contracted by 0.3%.
“Today’s numbers point to stronger growth momentum at the start of the year,” analysts at Goldman Sachs said, adding that they have improved their projections for Britain’s annual growth to 0.8% from 0.6%.
Analysts at ING also called the first-quarter number “massive,” adding that it was driven in part by rising real wages and an easing of a recent mortgage squeeze.
However, they flagged caution when interpreting the data, saying that some of the quarterly bounce is due to a “suspiciously large fall in retail activity” at the end of last year that was fully recouped in January.
“Still, it tallies with other economic indicators which suggest the economy is entering a period of stronger growth,” they noted.
The surged on Friday following the announcement, touching a fresh record high, while the mid-cap also rose. Sterling strengthened slightly against the U.S. dollar as well.
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