UK economy grew 0.3% in January, beating forecasts

A woman looks to buy fruit and vegetables at a stall in Lewisham Market, south east London, Britain, March 9, 2023. REUTERS/Hannah McKay

LONDON  -British economic output rose by a better-than-expected 0.3 percent month-on-month in January, according to data on Friday that could bolster investors’ bets that the Bank of England will raise interest rates again this month.

A Reuters poll of economists had pointed to growth of 0.1 percent.

The pound rose against the U.S. dollar and euro on the back of the figures, which showed growth was powered by the services sector – although much of it due to a one-off bounce in the education sector.

The manufacturing and construction sectors contracted, the Office for National Statistics said.

“In the face of severe global challenges, the UK economy has proved more resilient than many expected, but there is a long way to go,” said finance minister Jeremy Hunt, who presents his annual budget next week.

While markets reacted favourably to the growth data, the ONS said half of the 0.3 percent growth rate comprised the education sector, as a result of children returning to school after a “significant drop” in attendance levels in December.

“Across the last three months as a whole and, indeed over the last 12 months, the economy has, though, showed zero growth,” ONS Director of Economic Statistics Darren Morgan said.

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