Official figures suggest a better outlook for the economy this summer with the stronger-than-expected recovery of the coronavirus in recent months.
The Bureau for National Statistics also said on Wednesday that UK exports and imports continued to recover in March. However, there was a downward trend in trade with the EU, following the imposition of tighter border restrictions after the Brexit transition period ended in January.
Chancellor Rishi Sunak praised the figures indicating that the economy was showing “promising signs” after a “difficult start to the year”.
The 1.5 percent contraction in the first quarter was in line with economists’ expectations and caused by the third lockdown in January which caused the size of the economy to shrink 2.5 percent.
Growth exceeded expectations in February and March as businesses adjusted to restrictions and consumers grew more willing to spend online, indicating continued rapid growth in the second quarter.
Howard Archer, chief economic adviser to the EY Item Club, said the economy had been “fairly resilient” in the first three months of the year, with the lockdown causing “much less damage than feared in the country. start of quarter ”.
As recently as February, the Bank of England expected a 4.2 percent drop in first quarter GDP.
In March, the UK’s gross domestic product beat expectations and rose 2.1%, the fastest monthly growth rate since last August, leaving the economy only 5.9% smaller than it was in February 2020 before the pandemic hit.
Ruth Gregory, senior UK economist at Capital Economics, said the economy was now on track to reach its pre-pandemic level before year-end and well ahead of the BoE’s forecast last week. “The growth spurt in March shows that the recovery has accelerated faster than we expected,” she said.
In the first quarter, the economy was supported by public spending, in part due to the increase in health activity thanks to vaccinations and coronavirus tests, along with consumer spending and investments by consumers. businesses fell, following the third foreclosure.
But in March, when the number of Covid-19 cases fell rapidly, growth was balanced with services up 1.9% thanks to the reopening of schools and strong retail sales, with production in 1.8% increase. There was also a 5.8 percent construction boom as new work and repairs increased.
Monthly trade statistics, released alongside the GDP figures, showed a continued shift in trade with the EU to non-EU countries, despite a gradual return to more normal levels of trade with the EU after the end of Brexit transition period.
Imports from EU countries, excluding precious metals, rose 4.5% in March to reach £ 17.8 billion, according to figures from the Office for National Statistics released on Wednesday . Imports from outside the EU rose 8.4 percent to £ 19.3 billion.
The UK imported more from outside the EU than from inside the EU for the first time since comparable records began in 1997, official statistics show as companies increased trade during an uneven emergence of the pandemic around the world.
But the ONS said the continued volatility meant it was too early to assess whether this reflected short-term disruption or longer-term changes, as trade began to recover from the Covid disruption.
Data from March suggests a partial increase in the UK’s international trade, after significant declines due to both the Covid pandemic and Britain’s departure from the EU.
Darren Morgan, director of economic statistics at the ONS, said exports to the EU were now almost back to December levels. “However, imports from Europe remained weak during the first three months of the year, being overtaken by imports from outside the EU for the first time on record.”