Data released today by the Office for National Statistics reveals that, for the first quarter as a whole, UK gross domestic product increased by 0.1% over the last three months of last year. This was in line with the broad projection of a Reuters survey of economists, but the monthly decline in GDP in March was a worse result than the stagnant position forecast in the survey, with analysts noting the impact of the strikes.

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UK GDP had stagnated in January and February, ONS figures show.

Production in the consumer-facing services category fell 0.8% month-on-month in March, the ONS said. Overall service sector output fell 0.5% mom. However, manufacturing production increased by 0.7% between February and March.

Danni Hewson, head of financial analysis at stockbroker AJ Bell, said: “Let’s be clear, while the Bank of England may believe that the UK economy will now completely avoid the forecast recession, the country is not in good health. Rising prices, rising interest rates and the strike have created a cocktail that is quite unpleasant.

“Slow is the term that has been used to describe the 0.1% growth that the economy managed to achieve during the first three months of [the] But, to cash-strapped businesses and consumers, such listless momentum will likely feel like it has no momentum at all.”

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He added: “Taking March in isolation, the picture looks even bleaker than the weather blamed for dire retail sales, with GDP down 0.3% for the month.

“Inflation has taken its toll, many budgets have been cut to the bone and sector after sector is facing strikes as workers chase a few more pennies just to keep their heads above water.”

Martin Beck, chief economic adviser at think tank EY ITEM Club, said: “GDP surprised to the downside in March, falling 0.3% per month. However, for the first quarter as a whole, the economy still achieved 0.1% quarter-on-quarter growth.

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“The main cause of the March decline was a 0.8% month-on-month drop in output in the consumer-facing parts of the service sector, with retail sales reversing some of the strong gains of previous months. At the same time, Public sector output remained below late-2022 levels, reflecting the impact of ongoing industrial action. transport sector.”

He added: “More industrial actions and the additional May bank holiday are likely to weigh on activity in the second quarter, to the extent that a small quarter-on-quarter drop in GDP is plausible. However, this should represent a temporary setback, and the EY ITEM Club expects the recovery to gain momentum in the second half of 2023 as labor disputes are resolved, the fiscal easing announced in the Budget comes into force, and the fall in inflation helps achieve a recovery in households. purchasing power.”

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