Britain’s economy expanded above expectations in Q1
The latest data shows that the UK’s GDP growth of 0.7% in Q1 2024 exceeded expectations and marked an exit from recession. Despite this positive economic performance, the broader economic conditions remain fragile, primarily due to low long-term growth, declining real household disposable income, and lasting impacts from the COVID-19 pandemic, the Ukraine war, and Brexit.
The UK’s GDP growth of 0.7% in Q1 2024 outpaced the consensus estimate of 0.6%, though the first quarter’s GDP was only 0.3% higher than a year earlier, indicating weak longer-term growth.
Real household disposable income was 0.6% lower per head than in Q4 2019 and Britain’s economy is only 1.8% larger than it was at the end of 2019, making it one of the weakest performers among the G7 nations.
Economic challenges include the lasting impact of the COVID-19 pandemic, high inflation due to the war in Ukraine, and post-Brexit trade issues.
These economic factors are contributing to Prime Minister Rishi Sunak’s electoral challenges, as the Labour Party appears poised to win the upcoming election according to opinion polls. However, the timing of the positive economic data is unlikely to significantly influence the political landscape before the election.