Faster growth in the country’s economy than the EU and the US for the first quarter of the year. Moderate optimism about the country’s post-Brexit economic picture. The local elections have passed and their disappointing results, at least for the ruling Conservative party, were seen exactly a week ago. At the same time, until the next national elections, which are estimated to take place in November, there are at least two more quarters left to outline the course of the economy.

That is why the figures of the Office for National Statistics (ONS), which became known only yesterday, although they brought smiles to Britain, cause moderate optimism in the citizens of the country and in the government.

Specifically, the agency recorded a 0.6% increase in the Gross Domestic Product (GDP) for the first three months of 2024, and in fact it is the strongest of the last three years. In the distant fourth quarter of 2021 alone, the country saw an increase of 1.5%. Obviously, this is also positive for the island, as it essentially managed to slip out of the recession of the last half of 2023 and get back on the growth trajectory it desired.

It will take time for the changes to be seen

However, the reading and analysis of the pleasant new data is done with caution. The statements of the modestly optimistic Rishi Sunak, who although said that the economy has “changed course”, warned that it will take time “until the British people feel the changes” are typical.

As Yael Selfin, chief economist at KPMG UK, told Reuters, “despite the better near-term outlook, the improvement in the pace of GDP growth appears to be limited by weakness in productivity and the subdued level of employment growth.”

It is true that Britain has one of the slowest rates of recovery – among advanced economies – after the effects of the pandemic and the war in Ukraine that shook the financial landscape in the energy sector. The end of the first quarter of 2024 therefore did not completely overturn the general picture. According to the data, the country’s economy showed growth of only 1.7% higher than the levels of 2019, i.e. before the pandemic, while at the same time, among the G7, only Germany lags behind with a worse performance.

At the same time, GDP per capita increased for the first time in two years, but remains 0.7% lower than a year earlier. This is exactly what the official opposition party comments on and contradicts the positive data of the national statistical service. In particular, Labour’s Rachel Reeves, who is expected to take over the Treasury if the party comes to power, said that “this is not the time for the Conservatives to take a victory lap and tell the British people that they have never done better”. .

Where is the growth coming from?

Finance Minister Jeremy Hunt was content simply to state that “there is no doubt that the past few years have been difficult, but today’s growth figures are evidence that the economy is returning to health for the first time since the pandemic.”

Analysts attribute the growth to stronger retail trade, transport and fewer public sector strikes in the country. It is worth noting that indeed the country’s GDP growth was faster than that of the EU’s 0.3% and the USA’s 0.4% for the specific period.

At the same time, the data refuted and surprised the forecasts of leading economists and also of the Central Bank of England (BOE), who expected a smaller increase, around 0.4%. It is recalled that on Thursday the Bank kept interest rates at the highest level of the last 16 years.

According to Reuters, members of the Bank of England’s Monetary Policy Committee have hinted that it could cut interest rates as early as June, but in that event economists warn that faster GDP growth could delay the Bank’s decision and create new inflationary pressures.