UK economy shows unexpected growth of 0.3% in March

[LONDON] Britain’s economy expanded unexpectedly in March to cap another strong first quarter, official data showed on Thursday (May 14).

It suggested that despite the escalation of the Iran war, the economy was in slightly better shape than many feared.

Gross domestic product increased by 0.3 per cent month on month in March, the Office for National Statistics (ONS) said, against expectations in a Reuters poll of economists for a 0.2 per cent contraction.

The services sector, construction output and manufacturing all grew strongly.

Scott Gardner, investment strategist at JP Morgan Chase Personal Investing, said: “Many will be unconvinced that this momentum can be sustained throughout this year.

“The risk is that the energy-price spike following the start of the Iran conflict will persist and lead to a rebound in inflation.”

Recent business surveys indicate a rapid increase in cost pressures that is likely to weigh on corporate activity.

For Q1 as a whole, the economy expanded by 0.6 per cent – marking the third year running of conspicuously strong growth in the first quarter.

The ONS on Thursday published a blog that acknowledged post-pandemic shifts in the timing of spending in the economy.

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It nudged down its readings for Q1 of 2024 and 2025.

Rachel Reeves, the UK finance minister, said the data showed she had the right economic plan. REUTERS