The UK economy grew by 0.1% in the first quarter of 2023, following an unexpected contraction in March, according to official figures. This represents lower growth than the 0.4% figure recorded in January, and flat growth in February. The national statistics agency indicated that real household expenditure did not grow, reflecting the impact of high prices on incomes. The manufacturing, construction and production sectors all expanded in the first quarter, while services grew by just 0.1%. However, services dropped by 0.5% in March, partly due to falling retail and wholesale trade and vehicle repairs.
Inflation, still above 10% in March, is having a major impact on the UK’s continuing muted growth, especially when compared with other major economies. Despite concerns, the Bank of England no longer expects a recession in 2023, upgrading its UK GDP forecast. The central bank is now predicting growth of 0.9% by mid-2024, rising to 0.7% by mid-2025, up from previous predictions of the UK’s longest-ever recession. Governor of the Bank of England Andrew Bailey said the upgrade was a result of changing conditional data, including financial markets, commodity prices and government policy.
The euro zone recorded just 0.1% growth in Q1 2023 while the largest economy in the bloc, Germany, stagnated. The UK has begun discussions with the US government over a proposed free trade deal. UK ministers held talks with US trade representative Mike Froman in Washington DC earlier this week, and will meet with US Treasury Secretary Jack Lew in the coming weeks. An estimated 38% of UK exports to the US would be covered by such a deal, with cars, pharmaceuticals and financial services among the most significant exports.
The Institute of Chartered Accountants of England and Wales said the UK economy is the fastest-growing in the G7 and will grow faster than anticipated this year. It predicted that the economy will grow by the end of 2023 at a rate of 2.6%, faster than the IMF forecast of 2.3%. The IMF report, also released this week, lists the global economic recovery as a “work in progress”, with sub-par growth caused by headwinds including weak productivity, ageing populations and declining globalisation.
A new study from Accenture found that sharing economy platforms could increase global GDP by $1.6tn by 2025, and create 120 million jobs, rising to 250 million by 2025. The world’s 10 largest economies could gain a total of $335bn from the sharing economy. This could be the equivalent of half a percent of GDP for G20 countries by 2025.