UK Economy Shows Signs of Recovery with 0.6% Growth, but OECD Forecasts Modest Growth in Next Year’s GDP

The UK economy has shown signs of recovery as it grew by 0.6% in the first quarter of the year, surpassing economist expectations of just a 0.4% increase. This growth is a significant improvement since the Covid pandemic and marks the most substantial economic improvement seen since then. Despite facing two consecutive quarters of economic contraction at the end of 2023, resulting in a brief recession, Prime Minister Rishi Sunak can now mark off another one of his five pledges – to grow the economy.

However, while this growth is a positive development, the overall economic outlook for the UK remains challenging. The OECD has forecasted modest growth for the UK over the next 18 months, lowering its GDP forecast to 0.4% for this year. Additionally, projections for 2025 growth have also been reduced, making the UK the second-slowest growing economy among the G7 nations. Despite these challenges, Chancellor Jeremy Hunt acknowledged that there are positive signs of economic recovery on the horizon.

With wages expected to outpace inflation and falling energy prices, there are indications that workers will benefit from this growth. Tax cuts are also predicted to provide an additional boost to consumers’ purchasing power.

Overall, while this growth is a positive sign for the UK’s economy, there are still challenges ahead in terms of maintaining momentum and sustaining long-term economic growth.