U.K. economy emerges from recession, but inflation remains a concern

The U.K. economy has emerged from a recession, as official figures showed that gross domestic product increased by 0.6% in the first quarter of 2023, exceeding expectations. Previously, economists had predicted growth of only 0.4% for the previous three months.

Although there is no official definition of a recession, two consecutive quarters of negative growth are typically considered indicative of a technical recession. During the period from January to March, the U.K.’s production sector experienced growth of 0.8%, while the construction sector saw a decline of 0.9%. In March alone, the economy grew by 0.4%, following a 0.2% expansion in February.

The Bank of England’s Monetary Policy Committee had issued a warning on Thursday regarding persistent inflation indicators, stating that they “remain elevated.” The committee decided to keep the main interest rate at 5.25%. The central bank predicted that headline inflation would be close to 2% in the near-term, but expected a slight increase later in the year as the effects of a sharp decline in energy prices diminished.