The economy had contracted for two consecutive quarters in the second half of 2023, indicating a recent recession
Britain’s economy grew at a faster pace than previously estimated in the first quarter of 2024, but the broader economic outlook remains fragile ahead of next week’s election.
According to revised data from the Office for National Statistics, Britain’s gross domestic product (GDP) expanded by 0.7 percent in the first three months of 2024 compared to the previous quarter. This was higher than the initial estimate of 0.6 percent growth. However, the economy had contracted for two consecutive quarters in the second half of 2023, indicating a recent recession.
Election looming amid weak growth backdrop
The improved growth figures come just days before the U.K. general election, which opinion polls suggest the Labor Party under Keir Starmer is poised to win comfortably over Prime Minister Rishi Sunak’s Conservative Party.
GDP is estimated to have grown by 0.7% in Quarter 1 (Jan to Mar) 2024, revised up from a first estimate of 0.6%.
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— Office for National Statistics (ONS) (@ONS) June 28, 2024
Longer-term growth picture remains weak
Despite the better-than-expected first quarter performance, the longer-term growth picture remains weak, contributing to the government’s electoral difficulties. GDP in the first quarter of 2024 was only 0.3 percent higher than a year earlier, up from the initial 0.2 percent estimate.
Living standards squeeze poses electoral challenge
Moreover, real household disposable income – a key measure of living standards – was 0.6 percent lower per person in Q1 2024 compared to the final quarter of 2019, just before the COVID-19 pandemic.
“Income growth over the parliament so far has been worse than in any other since the 1950s, and the third worst in post-Edwardian Britain,” said Adam Corlett, principal economist at the Resolution Foundation. “Addressing this great living standards slowdown is the ultimate test for whomever wins the election.”
Pandemic and Brexit impacts weigh on U.K. economy
Britain’s economy has struggled since the last election, battered not only by the pandemic’s lasting impact on the labour force, but also by surging inflation following Russia’s invasion of Ukraine and post-Brexit trade frictions. In the first quarter of 2024, the U.K. economy was 1.8 percent larger than in late 2019, the weakest performance among the world’s seven largest advanced economies.
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