Image source, Getty Images
- author, Dearbil Jordan
- Role, Business reporter
Prime Minister Rishi Sunak said it would “take some time” for people to “really feel better” as figures revealed the UK has emerged from recession.
The economy grew by 0.6% between January and March after contracting in the second half of last year.
Sunak told the BBC that the British economy had “real momentum” but admitted there was “more work to do”.
Both Labor and the Lib Dems said there was nothing to celebrate. Rachel Reeves, Labour’s shadow adviser, said: “After 14 years of economic chaos, workers are still worse off.”
Gross domestic product — which measures the amount of goods and services an economy produces — rose more than expected in the first three months of the year. Analysts had expected growth of 0.4%.
Sunak indicated that there was now some strength behind the UK economy, which saw its fastest pace of growth in two years between January and March.
The UK fell into recession at the end of last year after contracting for two three-month periods in a row.
Mr Sunak said: “There is of course more work to be done and I understand that and that is why I am keen to stick to our plan and continue delivering for people.
“But I think today’s numbers show that we now have momentum.”
However, Ms Reeves said: “This is not the time for Conservative ministers to go on a victory tour and tell the British people they have never had it so good.”
Liberal Democrat Treasury spokeswoman Sarah Olney said it was time to call a general election.
The economy will be a major battleground in the upcoming elections, the date of which has not yet been revealed.
Meanwhile, the FTSE 100 index closed at a new record high after the release of economic figures.
It closed up 52.41 points, or 0.63%, at 8433.76 points, and the financial and industrial sector shares were among the largest rising stocks during the day.
Earlier this week, Bank of England Governor Andrew Bailey told the BBC that the UK was seeing a recovery, albeit not a strong one.
The bank voted to keep interest rates at their highest level in 16 years at 5.25%. Inflation, which measures the pace of price rises, is expected to fall to its 2% target in the next two months.
This has raised expectations for interest rate cuts next month. However, stronger than expected GDP numbers have dampened those expectations.
Ruth Gregory, deputy chief UK economist at Capital Economics, said it showed that “the Bank of England does not need to rush into cutting interest rates.”
She said the first rate cut would ultimately be determined by the upcoming employment and inflation numbers.
Sunak said GDP figures show the UK has the joint-highest growth rate among developed countries in the G7, tied with Canada.
He added: “Wages are rising, energy bills are falling, and taxes are falling.”
The government has reduced National Insurance by 4% since late last year.
However, it also kept income tax thresholds frozen, so when a person’s pay increases, they can move into a higher tax bracket.
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