Britain will avoid recession, say City analysts as growth returns

THE UK will avoid a recession this year, according to a string of City analysts who changed their gloomy predictions after the economy returned to growth in January.

As Jeremy Hunt prepares to deliver his maiden Budget next week, the Office for National Statistics (ONS) said the economy expanded 0.3pc in January after shrinking by 0.5pc in a December marred by strikes.

The data prompted Goldman Sachs, Deutsche Bank and Citi all to uprate their forecasts. While output in January was also hit by walkouts, statisticians said the rebound was helped by children returning to school after “unusually high absences” in the run-up to Christmas and the Premier League returning to its normal schedule after December’s World Cup in Qatar.

The ONS said the end of postal strikes also helped output. January’s rebound was driven by a dominant services sector, set to continue to outperform in February. Yet most economists expect the economy to remain smaller than its pre-pandemic size until at least 2024.