(CTN News) – The UK economy grew by 0.7% in the first quarter of 2024, higher than the initial estimate of 0.6%, according to revised figures from the Office for National Statistics (ONS). This stronger-than-expected growth came as the UK emerged from a brief recession at the end of 2023.
The upward revision was mainly due to stronger household spending, with increased spending on recreation, culture, housing, and food. Real household disposable income also continued to rise in early 2024 as workers secured wage increases.
This led to a rise in the household saving rate from 10.2% at the end of 2023 to 11.1%, the highest level since mid-2021.
The improved economic performance in the first quarter positioned the UK as the fastest growing economy in the G7 group of advanced economies.
Prime Minister Rishi Sunak hailed the new growth figures, stating that the Conservatives had a “clear plan to deliver a more secure future”. However, the opposition Labour Party accused the Conservatives of “14 years of economic vandalism” that had left people worse off.
While the economy has emerged from recession, many households may not be feeling the benefits, with budgets stretched by rising prices and higher interest rates.
UK Interest Rates at 16-Year High of 5.25%
Interest rates currently stand at a 16-year high of 5.25%, meaning higher borrowing costs for mortgages and loans, though savers have also seen better returns.
The Bank of England has signaled a potential interest rate cut in August, which would be the first drop in borrowing costs in over four years.
However, the impact may be limited, as many mortgage holders have already refinanced at higher costs, and about three million more households are set to see their repayments rise in the next two years as fixed-rate deals expire.
Overall, the upward revision to the first-quarter growth figures provides a more favorable economic backdrop for the incoming prime minister, though the deep-seated productivity issues in the UK remain a significant concern.
