Why it matters
The small expansion has bolstered the improved outlook for the UK economy. A recession was feared at the end of last year, but since then wholesale gas prices have fallen significantly and the economy is doing better than expected. Instead of a winter recession, Britain has recorded two consecutive quarters of growth.
It offers good news amid a deep cost-of-living crisis as household budgets have been stretched by a year of inflation in or near the double digits. In March, annual inflation was 10.1 percent.
In addition to falling energy prices, businesses and households have shown some resilience in the challenging economic environment. Employers, in particular, have been holding on to employees because of previous hiring issues and trying to find other ways to cut costs as their expenses increased.
But this data can only provide limited comfort. With only 0.1 percent growth, the British economy is still sluggish.
The data shows that Britain is in “a period of virtually no growth,” David Bharier, head of research at the British Chambers of Commerce, said in a statement. “The core problems facing UK businesses, such as unprecedented inflation, energy price shocks and record labor shortages, have not gone away.”
While gross domestic product data provides a useful overview of how the economy as a whole is performing, it masks the different experiences of households and firms. A long period of moderate growth and high inflation has not been felt equally in Britain.
What’s next
While Britain’s economic outlook has improved, it is not rosy.
On Thursday, the Bank of England said it expected the economy to level off in the first half of this year before expanding from the summer. For 2023, the country will grow an average of 0.25 percent, the bank predicted, which will only increase to 0.75 percent for 2024 and 2025.
