The UK economy has bounced back from recession, with stronger-than-expected growth of 0.6 per cent in the first quarter of 2024 – the strongest of all G7 economies. This momentum will need to be maintained given Britain’s wider economic backdrop of frequent downturns and stagnation, with GDP per capita growth down 90 per cent over the past 16 years, the Resolution Foundation said today (Friday).
Strong economic growth in March (0.4 per cent) contributed to the strongest quarterly growth (0.6 per cent) since Q4 2021 when the economy was still recovering from the pandemic, and lifted the UK out of recession. Encouragingly, both the services and production sectors enjoyed strong growth, though the UK’s improved trade balance was driven by falling imports rather than strong export growth.
However, the UK’s wider economic backdrop remains a concern. The UK has now experienced three recessions in the past 16 years. This record of a downturn occurring roughly every five years is far worse than their occurrence of roughly once every ten years during the second half of the 20th century.
Second, amid the ups and downs of technical recessions is a bigger picture of stagnation. GDP per capita grew in early 2024 for the first time in two years, but it is still down 1.3 per cent over this period, and has grown by just 4.3 per cent over the past 16 years in total. In contrast, during the 16 years running to the financial crisis in 2008, it grew ten times as much – by 46 per cent in total.
James Smith, Research Director at the Resolution Foundation, said:
“The UK swiftly exited its latest recession in 2024 with the strongest economic growth since late 2021.
“But the wider backdrop is still worrying. Britain is falling into recession twice as frequently as it did in the second of the 20th century, and it remains a stagnation nation. These all-too regular shocks and slumps in between are reducing living standards and straining the public finances.
“The battle of ideas on how to change this record should be key during the election campaign.”
