UK economy shrank unexpectedly by 0.3% in March

theguardian.com:

The UK economy shrank unexpectedly in March, by 0.3%, as the cost of living crisis and industrial action took a toll.

However, the economy grew by 0.1% over the first quarter as a whole, mainly because of a strong January, while growth flatlined in February, according to the Office for National Statistics. It followed 0.1% growth in the final quarter of 2022.

Darren Morgan, an ONS director of economic statistics, said: “Despite the UK economy contracting in March, GDP grew a little over the first quarter as a whole. “The fall in March was driven by widespread decreases across the services sector. Despite the launch of new number plates, cars sales were low by historic standards – continuing the trend seen since the start of the pandemic – with warehousing, distribution and retail also having a poor month. “These falls were partially offset by a strong month for manufacturing as well as growth in gas production and distribution and also in construction.”

The Bank of England, which increased interest rates to 4.5% on Thursday, has forecast that the UK economy will stagnate this year – expecting growth of 0.25% – after tearing up a forecast last year that Britain was on course to suffer one of the longest recessions on record, stretching into 2024.

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Central bank officials said inflation, which stood at 10.1% in March, will fall steeply over the summer, but only to 5.1% on average in the last three months of the year, still well above its 2% target.