Economy grows in Budget boost to Jeremy Hunt – live updates

The UK’s economy returned to growth in January, easing fears of an impending recession ahead of Chancellor Jeremy Hunt’s spring Budget, official figures have shown.

The ONS has released data showing how Britain's economy performed in January - REUTERS/Henry Nicholls

© REUTERS/Henry Nicholls
The ONS has released data showing how Britain’s economy performed in January – REUTERS/Henry Nicholls

Gross domestic product (GDP) rose by 0.3pc in January, according to the Office for National Statistics.


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The services sector also grew by 0.5pc in January after falling by 0.8pc in December.

Chancellor Jeremy Hunt said: “In the face of severe global challenges, the UK economy has proved more resilient than many expected, but there is a long way to go.

“Next week, I will set out the next stage of our plan to halve inflation, reduce debt and grow the economy – so we can improve living standards for everyone.”

The UK economy narrowly avoided recession at the end of 2022 even though the economy shrank by 0.5pc in December.

The economy flatlined in the final three months of last year, following a drop of 0.3pc between July and September, according to the Office for National Statistics (ONS).

Read the latest updates below.

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07:28 AM

Economy’s growth ‘no surprise,’ says Panmure Gordon

Arts, entertainment and recreation grew by 3.4pc in January, largely driven by the return of Premier League football after the World Cup.

Sports, amusements and recreation activities grew by 8.9pc, after the end of temporary shocks caused by the tournament in Qatar and strikes, according to Panmure Gordon’s chief UK economist Samuel Tombs.

07:21 AM

Public finances better than expected before Budget, says Lloyds

Jeavon Lolay, head of economics and market insight at Lloyds Banking Group said:

Heading into the Budget, public finances are in better shape than expected giving the Chancellor additional capacity to support the economy. Consumers could see a freeze in the Energy Price Guarantee and a freeze on fuel duty.

Growing the economy is a key part of the Government’s agenda and we know from our data that staff shortages are constraining economic activity. Improving labour market participation with targeted policies in areas like childcare and pensions, would help raise the productive capacity of the UK economy.

While our data shows an improvement in economic optimism, inflation remains business’ greatest concern. Business leaders will be watching the Budget for measures to encourage them to invest in technology or sustainability to reaffirm their confidence in the UK economy.

07:19 AM

Return to classroom drives growth, says ONS

ONS director of economic statistics Darren Morgan said: 

The economy partially bounced back from the large fall seen in December.

Across the last three months as a whole and, indeed over the last 12 months, the economy has, though, showed zero growth.

The main drivers of January’s growth were the return of children to classrooms, following unusually high absences in the run-up to Christmas, the Premier League clubs returned to a full schedule after the end of the World Cup and private health providers also had a strong month.

Postal services also partially recovered from the effects of December’s strikes.

07:08 AM

Hunt: ‘UK economy more resilient than expected’

Chancellor Jeremy Hunt said:

In the face of severe global challenges, the UK economy has proved more resilient than many expected, but there is a long way to go.

Next week, I will set out the next stage of our plan to halve inflation, reduce debt and grow the economy – so we can improve living standards for everyone.

07:07 AM

Manufacturing and construction suffer downturn

Although the economy grew slightly to begin the year, looking at the broader picture, GDP was flat in the three months to January.

Services expanded but manufacturing and construction were a drag on growth:

07:01 AM

Good morning

The year got off to a positive start as the economy grew by 0.3pc in January, according to the Office for National Statistics..

The expansion in gross domestic product (GDP) comes after Britain narrowly avoided a recession at the end of last year.

5 things to start your day 

1) Hunt forecast to have £166bn of headroom for Budget tax cuts | Chancellor comes under renewed pressure to pivot on corporation tax rise

2) I struggle to find men to work for me, says John Lewis chief | Dame Sharon White says she has been criticised for trying to ‘rebalance’ the ‘strong male culture’ at the retailer

3) Brexit freedoms make UK a magnet for highly-skilled migrants, says OECD | Abolishing red tape after leaving the EU is helping Britain lure more global talent

4) Credit Suisse shares hit record low after accounts questioned by US regulator | Struggling Swiss bank delays annual report after conversation with Securities and Exchange Commission

5) Inside Joe Biden’s plan for a tax raid on billionaires | The US President wants higher taxes – but he faces a battle to get them past Republicans

What happened overnight 

Falling bank stocks caused Asian markets to drop after a surprise capital raising at a Silicon Valley start-up lender unleashed fears of broader banking-system stress.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.7pc to a two-month low, with banks and Hong Kong tech stocks leading losses. Australia’s benchmark index S&P/ASX200 lost 2.3pc.

Japan’s shares ended lower, snapping a five-day winning streak, after the Bank of Japan left its ultra-easy monetary policy unchanged at Governor Haruhiko Kuroda’s last meeting.

The benchmark Nikkei 225 index dropped 1.7pc to close at 28,143.97, while the broader Topix index lost 1.9pc to 2,031.58. 

The US dollar edged higher and short-end Treasuries extended sharp overnight gains – driving two-year yields down another 12 basis points to 4.7837pc in Tokyo trading.

The sharp moves followed SVB Financial Group, parent of start-up-lender Silicon Valley Bank, noting a higher-than-expected “cash burn” from clients, falling deposits and rising costs of capital. It announced an equity sale hours after crypto-focused lender Silvergate said it was closing down.

Early trading gains on Wall Street were sharply reversed by the end of the day. The Dow Jones Industrial Average closed 1.7pc lower to 32,254.86.

The broad-based S&P 500 fell 1.9pc to 3,918.32 while the tech-rich Nasdaq Composite sunk 2.1pc to 11,338.36.

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