Economy shows signs of recovery as January GDP figures report 0.3% growth
GDP figures for January have shown a 0.3% increase month-on-month, recovering some of the ground lost in December when output fell by 0.5%.
Experts have said the figures provide some “hope that the UK economy may finally be kicking into gear” after the economy stagnated and went into negative growth in the final months of 2022.
Kevin Brown, savings specialist at Scottish Friendly, said: “The services sector recovered particularly well with growth of 0.5% in January after falling 0.8% in the month prior. Output in consumer-facing services fell by -1.2% in December but also rebounded strongly in January with growth of 0.3%.
“There is some reason for optimism, but the reality is that growth remained flat in the three months to January. Successive increases in GDP will be needed before we can begin to feel more confident about the strength of the UK economy.
“Consumer confidence also remains on a knife edge and will be crucial to the outcome in the coming months. Heading into his budget announcement next week, the chancellor will need to manage the situation carefully and ensure households are supported in the right ways while energy costs remain inflated and food prices continue rising.
“Bringing inflation down remains a key priority, as it will help relieve the pressure on household incomes and allow consumers to spend more freely. Uncertainty over the economy also leads to financial caution among households and they will be more likely to save money than spend it until they feel more optimistic about the future.”
Tina McKenzie, Policy Chair at the Federation of Small Businesses (FSB), added: “While January’s figures are a glimmer of hope, the flat growth over the previous three months means we’re not out of the woods yet, with tough trading conditions persisting for many small firms.
“Plenty of challenges remain. Inflation has only barely eased, and the tax burden for small firms is as high as it’s been for seven decades.
“The closure of the Energy Bill Relief Scheme at the end of this month is a looming deadline for many small businesses who are likely to see their bills shoot up. The planned fuel duty hike must not take place, as it would be devastating for countless small businesses which rely on their vehicles.
“We’re looking for a Budget that focuses on our three priorities: help for small businesses to drive growth, to boost investment, and to increase labour market participation.
“We want to see business rates overhauled, with many more small firms taken out of paying them, giving them some breathing space and reducing the day-one costs faced by new enterprises.
“Small firms will be looking to the Chancellor to demonstrate his leadership on late payments when he stands up on Wednesday.”