The British economy grew beyond expectations in Q1

Recent data indicates that the UK’s GDP growth of 0.7% in Q1 2024 exceeded expectations and marked an exit from recession. Despite this positive economic performance, broader economic conditions remain fragile due to low long-term growth, declining real household disposable income, and the lasting impacts of the COVID-19 pandemic, the Ukraine war, and Brexit.

The 0.7% GDP growth in Q1 2024 surpassed the consensus estimate of 0.6%, but the GDP for the first quarter was only 0.3% higher than a year earlier, indicating weak long-term growth.

Real household disposable income was 0.6% lower per capita than in Q4 2019, and Britain’s economy is only 1.8% larger than it was at the end of 2019, making it one of the weakest performers among the G7 nations.

Economic challenges include the lasting impact of the COVID-19 pandemic, high inflation resulting from the Ukraine war, and post-Brexit trade issues.

These economic factors are contributing to Prime Minister Rishi Sunak’s electoral challenges, as opinion polls suggest the Labour Party is poised to win the upcoming election. However, the timing of the positive economic data is unlikely to significantly influence the political landscape before the election.