February's expansion in national output raises hopes that the UK is moving out of a recession.
ADVERTISEMENTThe UK's gross domestic product rose by 0.1% in February, confirming that the UK economy has now been expanding for two consecutive months.
January’s growth reading, formerly 0.2%, was also revised up to 0.3%, according to data released by the Office for National Statistics on Friday.
The expansion seen in February, which was in line with analysts' forecasts, comes as a welcome sign after the UK slipped into a recession late last year, marked by two consecutive quarters of economic contraction.
If the economy expands in the first three months of 2024, the recession can be classed as over, meaning the UK is edging closer towards this goal.
"This [data] supports our cautiously optimistic view on the UK economy, which we think has plenty of room to rebound following the underwhelming performance in 2023," said Matthew Ryan, Head of Market Strategy at global financial services firm Ebury.
"The continued easing in inflation, particularly following the upcoming drop in household energy bills in April, should support spending activity," he added.
The largest driver of growth in February was production, which grew by 1.1% following a 0.3% fall in January.
Services output rose by a modest 0.1% in the month, after January’s reading of 0.3%.
Dragging down overall growth was construction output, which fell by 1.9%, hampered by wet weather.
Although the UK's growth is still modest, Chancellor Jeremy Hunt has claimed the data is a "welcome sign that the economy is turning a corner".
Last year’s recession came as a blow to the ruling Conservative party as it prepares for an expected general election in 2024.
Friday's news may nonetheless remove any urgency for the Bank of England to move on interest rate cuts.
The Bank is now expected to reduce borrowing costs from their 16-year high of 5.25% in June.
February’s positive reading will no doubt be raising hopes of a soft landing - meaning that the fight against inflation can be achieved without provoking a sustained recession.
