Monthly real gross domestic product (GDP) has grown by 0.2% in January 2024, following a fall of 0.1% in December 2023, the Office for National Statistics (ONS) has revealed.
Real GDP was estimated to have fallen by 0.1% in the three months to January 2024, compared with the three months to October 2023.
In addition, services output grew by 0.2% throughout the month and was the largest contributor to the rise in GDP, but in the three months to January 2024 services output showed no growth.
Production output fell by 0.2%, and in the three months to January production output also fell by 0.2%.
Construction output grew by 1.1%, but fell by 0.9% in the three months to January 2024.
Reaction:
Nicholas Hyett, investment manager at Wealth Club:
“A stronger month for the dominant consumer sector, particularly consumer facing services, together with pick up in construction activity means the UK economy is back in growth in January – albeit modest.
“That was despite some disruption to global supply trains from conflict in the Middle East and Red Sea, and the impact of strikes in healthcare, railways and the Screen Actors Guild – all of which dented overall output.
“The UK’s small manufacturing sector continues to struggle – thanks in large part to a continued slowdown in North Sea oil investment.
“The Chancellor’s recent decision to extend a windfall tax on UK oil and gas producers is unlikely to do a sector which has been in decline since at least the late 1990s many favours – further discouraging investment in what is a mature oil field anyway.
“Overall performance is in line with market expectations, so unlikely to cause a major move in markets. But, if the return to growth can be sustained the country should be on course to exit recession in pretty short order – a relief for the government even if the man or woman on the street is unlikely to notice the difference between anaemic growth and mild recession.”
Sam Alsop-Hall, chief strategy officer at Woodrow Mercer Healthcare:
“It feels like we’re walking a tightrope in a whirlwind. Each step, though calculated, is uncertain.
“This delicate balance between resilience and adaptability is essential as we navigate through subtle growth and looming challenges.
“Reflecting on our company’s own journey, the last two years have been almost identical, underscoring the flatness of the current economic landscape, especially stark when contrasted with our previous growth of over 100% year-on-year.
“This shift from forwards to flat underlines the unpredictable economic climate we’re facing.
“The main challenges ahead include steering through fluctuating consumer demand and managing the ever-present hurdles of inflation and supply chain disruptions.
“Despite these obstacles, our commitment to innovation and sustainability remains unwavering, as we continue to seek opportunities for growth.
“Our journey so far in 2024, compared to 2023, has been better, but still so far removed from the “good times”. Bring them back.”
Charles Breen, founder at Montgomery Financial:
“The cost-of-living crisis is still baring its teeth.
“As people cut back on spending, it is further restricting the economy’s attempts to get out of the recession we are in — a quagmire of the Government and Bank of England’s own making and both seem too dim or clueless to get us out of it.
“Such a limp growth figure may mean we are technically out of recession but without a reduction in interest rates we will see more and more businesses fail this year.
“Are we entering into a second decade of near stagnant growth? It definitely feels like we are in another cycle of low growth for the foreseeable future.”
Vivienne Hayes MBE, CEO at Women’s Resource Centre:
“The economy is feeling like it’s crumbling.
“Our members, who are women’s charities providing what we call the fourth emergency service to women and their children, are facing unprecedented cuts whilst millions of women and their families are struggling to eat and stay safe.
“We know many esteemed economists, such as Mariana Mazzucato, are debating and offering alternative economic structures.
“Our own members in Manchester from the Alternative Women’s Economy (AWE) are leading the way in developing hyper-local alternative approaches that benefit families and local economic infrastructure.
“It’s high time economic structures were revised to benefit the whole of our society rather than the minority.”
Ken Brotherston, CEO at TALiNT Partners:
“The news that the economy grew by 0.2% in January simply confirms what most people are feeling: it’s tough but not as terrible as some would have you believe.
“It supports the view that we continue to edge towards a better second half of 2024 with inflation under control and interest rates set to fall, but even though the season has changes, it will still take a bit longer for most people to feel they have a genuine spring in their step.”
Jo Spolton, founder at Rumage:
“Through our lense, 2024 has seen a slowdown in activity. Any form of growth seems like statistical manipulation.
“January is always a busy month for us but this year saw 17% fewer searches and purchases compared to January 2023.”
Mitul Pandya, managing director at Charterwells:
“Under normal circumstances, if the temperature around you increased by 0.1% or dropped by 0.2% it is a non-issue.
“But given the storms our economy has endured over the past 4 years, these small percentages are truly a relief.
“A period of low or very small growth means stability. As an adviser to small businesses, that is what they are desperate for.
“It allows business owners to dust themselves off, plan investment, predict sales, manage costs and recruit.
“Though this data isn’t mind-blowing, it’s a step in the right direction and that’s what businesses need.”
Riz Malik, director at R3 Mortgages:
“The country feels like it is in recession even if it may not be. Consumer confidence is shot and that’s a hard thing to win back.
“Many business owners feel the same with growing insolvency rates..
“The slight uptick in growth may be a small win for the Government but it doesn’t help the argument for the Bank of England to make the urgent rate cuts we need.”
Ranald Mitchell, director at Charwin Private Clients:
“Thankfully this year is outpacing 2023 for us, but looking around the city on the commute to work, there’s an obvious increase in commercial properties vacant.
“Businesses are winding up, offices, pubs, restaurants and shops are closing as they reshape or throw in the towel altogether.
“Though the Government may see a ray of light in this data, for many businesses it feels like there are darker days ahead.”
Craig Fish, director at Lodestone Mortgages & Protection:
“Consumers and businesses up and down the UK are struggling as indicated by the data.
“The growth in retail seen in January is likely an after-effect of Christmas and the January sales, and as we are yet to see the full effect on interest rate increases filter through to the economy this number could change in coming months.
“The labour market is also showing signs of cooling so the sooner policymakers start to cut rates, the better.”
Gary Bush, financial adviser at MortgageShop.com:
“To read that the UK is thought to have grown by 0.2% in January doesn’t exactly make your heart skip a beat.
“However that is 0.3% better than the last release of data, which is significant.
“The UK in January did come out of the blocks well with that New Year feel good factor, but it’s tricky though to call if February felt the same.
“The main challenges for the financial community starts at the top with mortgage lenders having knee jerk reactions to any occurrence in the markets, which causes chaos for consumers.
“Having said that, so far 2024 is head and shoulders above a dismal 2023.”
Justin Moy, managing director at EHF Mortgages:
“There seemed to be some green shoots of improvement at the turn of 2024, but we have slowly seen the mood of the country turn as grey and damp as the weather. That initial rush of home buyers has receded.
“Everyone is waiting to see if the predictions on mortgage rates comes true. Lenders have definitely suffered on their processing times with lenders weeks behind, which just impacts on our performance and creates unhappy clients.
“Not a lot of Consumer Duty here.”
Andrew Montlake, managing director at Coreco:
“Whilst the Government will be quick to seize on the positives of potentially moving out of recession so quickly, the reality is that insipid growth will feel no different to recession on Britain’s high streets.
“There needs to be active, rather than passive management of the economy, a long term plan rather than short term strategies to get more votes, and bravery from the Bank of England to get ahead of the curve with an early rate cut.
“There are positives ahead, but green shoots need to be carefully nurtured before proclaiming them a mighty Redwood.”
Darryl Dhoffer, adviser at The Mortgage Expert:
“So can we start to see in our rear view mirrors the technical recession, and will the Bank Of England start to ease the pressure on high interest rates that still has a strangle hold on businesses and consumers – definitely feels like we have been in the mortgage rate tumble dryer for too long – far from out of the woods yet, but encouraging signs none the less”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“It certainly does not feel that the economy is growing.
“More like be strangled by rising costs and the actions of the Bank of England.
“Last week’s budget was as impactful as a feather landing on the moon, so more of the same until the base rate reductions start.”
Ben Perks, managing director at Orchard Financial Advisers:
“I don’t think many people will be punching the air with delight because of a 0.2% uptick in economic growth.
“Reality is, for the consumer, it certainly doesn’t feel any easier than it was a few months ago.
“Cost of living crisis is still gripping the UK, mortgage rates are all over the place and arrears figures are rising.
“Times continue to be hard and families are struggling. Intervention is needed and neither the Bank Of England or Government should take a 0.2% shift as a sign things are improving.”
Michelle Lawson, director at Lawson Financial:
“We are busy and there is activity but there could be more.
“We need to see more than little shoots of improvement now and the public need a bit of good news. The recession appears short-lived as anticipated.
“Consumers are confused due to varying mixed messaging hence the skewed data and there are people out there still struggling as recently demonstrated by the increase in arrears.”
Rohit Kohli, director at The Mortgage Stop:
“Technically we’re out of the recession but if you speak to our clients no one feels like that. In fact people are finding it harder – the rate of inflation may have fallen but prices are still going up and its making it harder day by day for everyone.
“Anyone celebrating these numbers just isn’t in touch with reality the inaction by the government, coupled by the cautious nature from Threadneedle street risks more pain for everyone and more dire consequences for the country as a whole.”
Ken James, director at Contractor Mortgage Services:
“If it walks like a duck, talks like a duck and looks like a duck, its still a duck regardless of what the data is telling us.”
