9:08 am, April 12, 2024
New car production has been singled out for praise after it helped to grow the UK economy in February, following a period of recession at the end of last year.
The Office for National Statistics says that gross domestic product (GDP) was estimated to rise 0.1% in February, largely as a result of production and manufacturing in sectors including the automotive industry.
The official statisticians also revised the previous estimate for January from 0.2% to 0.3% growth, as some of the nation’s financial worries slowly begin to ease.
The production side of the economy was strong, contributing the most to the UK’s overall growth as output from the sector rose 1.1% in February, compared to a 0.3% fall in January.
Construction sector output fell by 1.9%, hit in part by poor weather weather during the month. It was the wettest February in the south of England since at least 1836.
Reacting to the findings, Liz McKeown, ONS director of economic statistics, said: ‘The economy grew slightly in February with widespread growth across manufacturing, particularly in the car sector.
‘Services also grew a little with public transport and haulage, and telecommunications having strong months.
‘Partially offsetting this there were notable falls across construction as the wet weather hampered many building projects.’
Figures recently published by the Society of Motor Manufacturers and Traders (SMMT) showed that car production was up 14.6% to 79,907 units in February.
It was the best February since 2021 with nearly all volume carmakers posting a rise. The period also marked six consecutive months of growth in car manufacturing.
The boost appears to have helped the economy seemingly put the 2023 recession behind it in the new year. A recession is defined by at least two quarters in a row where the economy contracts, as it did in the second half of 2023.
However, after the January and February readings showed growth, if the whole first quarter of 2024 is to be negative then March must show a drop of 1.29% or more.
‘We are optimistic about the near-term outlook for GDP,’ said Rob Wood chief UK economist at Pantheon Macroeconomics.
‘Both services and manufacturing have returned to growth this year and the construction sector will likely join them once the rain disruption passes.’
Chancellor of the Exchequer Jeremy Hunt said: ‘These figures are a welcome sign that the economy is turning a corner, and we can build on this progress if we stick to our plan.’
Labour shadow chancellor Rachel Reeves said: ‘After 14 years of Conservative economic failure, Britain is worse off with low growth and high taxes. The Conservatives cannot fix the economy because they are the reason it is broken.’
