Britain Shakes Off Recession as Economy Grows Faster Than Expected

The News

The British economy emerged from a recession at the start of this year, growing faster than economists expected, data published on Friday showed.

Gross domestic product increased 0.6 percent in the first quarter, the Office for National Statistics said. The economy had shrunk for two consecutive quarters at the end of last year, constituting a recession, though only a shallow one.

Britain’s economy is still a ‘mixed’ picture.

In the first three months of the year, economic growth was driven by the services sector, which expanded for the first time in a year, statistics agency said. Transport services, legal services and scientific research all grew strongly, but services that include hotels and restaurants fell slightly, and the construction sector contracted sharply.

G.D.P. per person grew 0.4 percent in the first quarter, following seven consecutive quarters of decline.

Still, Britain’s economic data “is incredibly mixed,” said Tera Allas, director of research and economics at McKinsey’s Britain and Ireland office and a former economist in the civil service. Some sectors like professional services and technology have been doing well, but others like hospitality have struggled, she said.

The economic picture about consumers is “even murkier,” Ms. Allas added. Sentiment is negative and, by some measures, retail sales are down. But consumer spending has still been a key aspect of the country’s economic resilience. Household spending, adjusted for inflation, grew 0.2 percent, following two quarters of declines, the statistics agency said.

Some of that can be explained by the labor market. Even as interest rates are at their highest level in 16 years, slowing investment, and business bankruptcies have increased, unemployment has risen only modestly, to 4.2 percent in February, up from recent lows of 3.8 percent.

The medium-term outlook is sluggish.