...and things were already picking up in lockdown

THE economy began to expand again in March in what Chancellor Rishi Sunak hailed a ‘promising sign of things to come’.

The UK’s output, or gross domestic product, climbed 2.1 per cent month-on-month according to the Office for National Statistics – even as the country was in lockdown.

This meant the economy shrank by just 1.5 per cent in the first quarter of the year – better than the 1.7 per cent economists predicted. Mr Sunak said: ‘Despite a difficult start to this year, economic growth in March is a promising sign of things to come. Almost two million fewer people are expected to be out of work than initially forecast, and the UK economy is in a strong position to grow quickly as we emerge from the pandemic.’

The Bank of England is predicting growth of 7.25 per cent this year – the biggest peacetime boom since 1927. But this follows an enormous 9. per cent slump last year – the worst since the 1709 Great Frost.

And even following March’s rise in output, GDP was still 5.9 per cent below its level in February 2020, the last month which was unaffected by the pandemic.

But if Britain’s booming recovery continues in line with the Bank of England’s projections, there will be no need for further tax rises, according to Oxford Economics.

Andrew Goodwin, chief UK economist at the forecasting group, said: ‘The prospect of better growth has given [Mr Sunak] more flexibility. Tax hikes should be off the table, certainly new tax hikes.’

The UK’s trade with the EU continued to rise after falling off a cliff in January as businesses struggled with post-Brexit paperwork and shipping delays. Imports climbed by £1billion or .6 per cent in March compared to February, and exports by £ 00million or 4.5 per cent.

But in a sign that supply chains are still

being disrupted, combined with lockdowns across Europe, imports to the UK from the rest of the world outstripped those from the EU for the first time since records began in 1 7.

The ONS said: ‘It is too early to assess the extent to which this reflects short-term trade disruption or longer-term supply chain adjustments.’ Economists are now confident that Britain’s vaccine rollout and easing of lockdown will support the economy for the rest of the year.

Ruth Gregory, of Capital Economics, said: ‘The reopening of sectors in the coming months should trigger rises in GDP of at least 3 per cent to 3.5 per cent in the second and third quarters. That would take the economy back to its February 2020 level before the end of the year.’