Britain’s economy returned to growth in January, official data showed, easing fears of an impending recession ahead of Chancellor Jeremy Hunt’s spring budget.
The Office for National Statistics (ONS) said the economy grew by 0.3% in January after a sharp 0.5% fall in gross domestic product (GDP) in December.
Still, looking at the broader picture, GDP was flat in the three months to January as Britain narrowly avoided being hit by recession late last year.
The biggest force behind January’s growth came from the services sector, which rose 0.5% after falling 0.8% in December.
The ONS said other industries such as education also boosted GDP as children returned to classrooms, following an unusually large number of absences ahead of Christmas.
The transport and storage sector also returned to growth as it partially recovered from the effects of the December strike.
December’s GDP figures were hit by several days of rail and postal strikes and falling output in the entertainment sector as football’s Premier League took a break for the World Cup.
The January figure beat expectations as analysts predicted the economy would achieve 0.1% growth in the month.
Darren Morgan, director of economic statistics at the ONS, said: “The economy is partially back from the big drop seen in December.
“Over the last three months overall and, indeed over the last 12 months, the economy has, however, shown zero growth.”
In addition, the construction sector contracted 1.7% after being flat in December, which the ONS said could be partly due to heavy rains in the first two weeks of January slowing building.
But housebuilders have seen a general decline in work amid the recent slowdown in the housing market.
Chancellor Jeremy Hunt is due to deliver his spring budget on Wednesday, which will set out the government’s plan to stimulate economic growth.
Mr Hunt said: “Faced with serious global challenges, the UK economy has proved more resilient than many expected, but there is a long way to go.
“Next week, I will set out the next steps in our plan to halve inflation, reduce debt, and grow the economy – to improve the standard of living for all of us.”
Labour’s shadow chancellor Rachel Reeves said the GDP figures showed the economy was “moving along this Tory path of controlled decline”.
She said: “People will be asking themselves whether they feel better under the Tories, and the answer will be no.
“Now we need the ambition to grow our economy so that every part of Britain feels better, which is Labor’s mission to secure the highest sustained growth in the G7.”