The British gross domestic product (GDP) increased by 0.1% in the first quarter, in line with economists’ expectations, after an identical increase during the last three months of 2022, the National Statistics Office (ONS) announced on Friday. For its part, GDP fell at the end of the quarter, with a contraction of 0.3% only in the month of March, after having stagnated in February and an increase of 0.5% in January, the statistics institute specified.

First-quarter growth “was driven by the IT and construction sectors,” but the economy was held back by strikes over wages “in health, education and public administration,” Darren Morgan, the ONS’s director of economic statistics, said on Twitter.

Growth of 0.25% in 2023

In March, the economy suffered from a “widespread decline in the service sector” but also from falling car sales and a difficult month for the warehousing, distribution and retail sector, Darren Morgan added. “A weaker economy in March underscores its fragility despite falling wholesale energy prices, improving supply chains and consumer confidence,” said KPMG economist Yael Selfin.

The British economy, weighed down by inflation clinging to above 10%, was in recession until recently this year, after narrowly escaping it at the end of 2022. But the latest forecasts, including those released Thursday by the Bank of England, are more optimistic.

To fight inflation, the Bank of England (BoE) raised its rates on Thursday for the twelfth time in a row to 4.5%, taking them to the highest since October 2008 and the financial crisis, judging that the British economy is holding up better than it thought.

It now forecasts growth of 0.25% in 2023 and no quarters of contraction this year. “While the recession is likely out of the picture, vulnerabilities from rising borrowing costs and credit crunching should dampen business and household activity this year, and business investment and consumer spending are expected to remain subdued in the near term,” added Yael Selfin.