Monthly GDP fell by 0.3 per cent in March 2023, following flat growth in February. This monthly figure was driven by a fall in services which offset monthly growth in construction and production.
GDP grew by 0.1 per cent in the first quarter of 2023 relative to the previous three months, in line with our last most recent forecast. As shown in figure 1 below, the UK economy has largely flatlined following the initial stages of post-pandemic recovery; today’s monthly GDP is estimated to be only 0.1 per cent above its pre-pandemic (February 2020) level. As we stress in our latest UK Economic Outlook, for UK economic performance to ‘jump-start’ into a new era of high output growth, structural change will be needed.
We expect that monthly GDP will bounce back in April, growing by 0.3 per cent relative to March, driven by growth in services. Indeed, the S&P Global/CIPS UK Services PMI reported an optimistic balance of 55.9 in April, up from 52.9 in March. Surveyed businesses noted a sustained rise in consumer spending in April, especially in the travel, tourism and leisure sub-sectors. However, a combination of high demand and still-high input costs meant that businesses continued to report passing on higher costs to clients, leading to an acceleration in the rate of price increase ？ this is concerning given the increasing embeddedness of inflation in the economy.