Overall, in the first three months of the year, the economy grew 0.8%, the statistics office said. Growth was fueled by the better-than-expected recovery in January when restrictions were lifted after the Omicron wave of the coronavirus. Compared to other major economies, it was a good start to the year: the United States shrank by 0.4%, the French economy stagnated and that of Germany grew by only 0.2%. .
But the outlook for the UK economy is weak and the risk of recession has intensified. The Bank of England said last week that it expects growth to slow in the second quarter as inflation-adjusted incomes continue to fall and supply chains are disrupted by the war in Ukraine and the lingering pandemic.
Although, in an effort to curb inflation, the central bank has hiked interest rates four times since December, taking them to their highest level since 2009, policymakers are divided on the number of further rate hikes that the economy can bear. The bank predicted the economy would contract by almost 1% in the last quarter of the year. And for next year, on an annual basis, he also predicts that the economy will contract.
Much of the pain will come from a squeeze in disposable income, which is expected to be the second biggest drop since records began in 1964, the central bank said. On Wednesday, the National Institute for Economic and Social Research, a research body in London, added to the stark warnings. He said he estimated 1.5 million households across Britain would face food and energy bills above their disposable income this financial year.
These prospects increase pressure on the UK government to take more decisive and targeted action to support those on low incomes.