Why It Matters
The small expansion has cemented the improved outlook for Britain’s economy. Late last year, there were fears of a recession but since then, wholesale gas prices have fallen substantially, and the economy has fared better than expected. Instead of a recession through the winter, Britain has recorded two consecutive quarters of growth.
It offers some good news amid a deep cost-of-living crisis, as household budgets have been stretched by a year of inflation in or near the double digits. In March, the annual inflation rate was 10.1 percent.
Alongside falling energy prices, businesses and households have shown some resilience to the challenging economic circumstances. In particular, employers have held on to workers because of previous hiring difficulties and tried to find other ways to cut costs as their expenses rose.
But this data can only bring limited comfort. With just 0.1 percent growth, Britain’s economy is still sluggish.
The data shows Britain is in “a period of virtually no growth,” David Bharier, head of research at the British Chambers of Commerce, said in a statement. “The core issues affecting British businesses, such as unprecedented inflation, energy price shocks, and record tightness in the labor market, have not gone away.”
Although gross domestic product data provides a useful overview of how the economy is performing as a whole, it masks the different experiences of households and businesses. A long period of lackluster growth and high inflation hasn’t been felt equally across Britain.
What’s Next
Even though Britain’s economic outlook has improved, it’s hardly bright.
On Thursday, the Bank of England said it expected the economy to flatline through the first half of this year before growing from the summer. For 2023, the country will average 0.25 percent growth, the bank predicted, which will only increase to 0.75 percent for 2024 and 2025.
Eshe Nelson
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