GDP in the UK has seen a rise of 0.2% in January 2024, after a drop of 0.1% in December, the Office for National Statistics (ONS) has found.

Services output growth matched that of the entire GDP growth in January, after a 0.1% drop in the previous month, and was the largest contributor to the growth of monthly GDP.

Construction output grew by 0.5% in January, following a fall of 1.1% in December, while production output dropped by 0.2%, after a growth of 0.6% in the previous month.

Personal finance analyst at Bestinvest, Alice Haine, said: "The UK economy took its first tentative steps out of recession in January with growth of 0.2%, raising hopes that the country’s downturn will be short-lived and shallow.

"Britain’s economy fell into a technical recession in the second half of last year, as defined by two consecutive quarters of negative growth, after being battered by high interest rates, high inflation, bad weather, perpetual industrial action and lacklustre retail sales.

"The hope from here is that January’s slightly more promising GDP figure, largely driven by a strong performance in the services sector with upbeat retail sales volumes helping to offset the steep drop in December, will energise the economy and set it on the road to recovery pushing any recession talk firmly into the rear-view mirror."

However, in line with the recession, across the quarter, real GDP is estimated to have fallen by three months to January 2024, compared to the three months to October 2023.

Across this period, product and construction output fell by 0.2% and 0.9% respectively, with services output showing no change quarter-on-quarter.

In the services sector, only six of the 14 subsectors saw a rise in their respective outputs, with education being the largest negative contributor, falling by 1.7% over the quarter.

Wholesale and retail trade; repair and maintenance of motor vehicles and motorcycles, and finance and insurance activities also fell by 0.4% and 0.5% respectively.

Head of money and markets, Susannah Streeter, added: "Ongoing strikes have been weighing on the healthcare and transports sector and it continues to be a dismal time for TV and film production.

"There is hope that with interest rate cuts eyed on a summer horizon, consumers and companies will continue to be more optimistic about the road ahead, and that the recession will be in the rear-view mirror. These figures are unlikely to be a game changer for Bank of England policymakers, with a June date now largely the earliest expected for an interest rate cut."

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