1 of 3 | The British economy confounded expectations to grow by 0.3% in January, reversing a fall in GDP of -0.5% in December. That was despite a 0.4% drop in manufacturing growth that helped push down overall production output growth by 0.3%, after growing 0.3% in December. File Photo by Jeff Kowalsky/UPI
March 10 (UPI) -- Britain's economy rebounded unexpectedly in January, growing by 0.3% after shrinking by a half percent in December, the country's main statistical agency said Friday.
The performance was largely the result of a strongly-performing services sector, which grew by 0.5% in January after falling by 0.8% in December, along with other major contributions from education, transport and storage, health and arts, entertainment and recreation all of which reversed falls, the Office for National Statistics said.
"The main drivers of January's growth were the return of children to classrooms following unusually high absences in the run-up to Christmas. The Premier League clubs returning to a full schedule after the World Cup and private health providers also had a strong month," said ONS Economic Statistics Director Darren Morgan in a Twitter post.
However, he warned while the economy had "partially bounced back" the bigger picture was less positive with GDP flatlining in three months to January and that over the past 12 months the economy had shown zero growth.
That was reflected in a 0.4% fall in manufacturing that helped push down overall production output growth by 0.3% after growing 0.3% in December, while construction sector growth which was flat in December, nosedived, dropping by 1.7%.
The report comes ahead of Wednesday's budget in which Chancellor Jeremy Hunt will set out his tax and spending plans for the coming year in a speech to parliament in which he is expected to cancel a planned cut in energy support that would have seen average annual bills rise from $3,009 to $3,611.
Prime Minister Rishi Sunak welcomed the figures saying they showed his government's "plan is working, that it's the right one and we need to stick to it".
However, the opposition Labor Party said the performance proved the Conservative government was presiding over the decay of the country's once great economy.
"Today's results show our economy is still inching along this Tory path of managed decline," read a Twitter post by the shadow chancellor, Rachel Reeves. "Thirteen years of failure have left growth on the floor and our economy weaker."
The Bank of England and the International Monetary Fund both forecast Britain will go into recession this year. The IMF's GDP forecast is -0.6% while the BoE sees the economy shrinking by 0.7%.
Last month's ONS figures showed the economy flatlined in the fourth quarter, with the gross domestic product showing no change.
The performance meant the world's fifth-largest economy neither grew nor shrank and recession was avoided, albeit by the slimmest of margins after the economy saw a 0.2% decline in GDP in the third quarter. A recession is defined as two consecutive quarters of negative growth.