The announcement of data indicating the GDP expanded by 0.2% in January has increased the likelihood that the UK will emerge from recession swiftly. According to the Office for National Statistics, the expansion of the service and construction industries has helped to boost national output, which has climbed for just the second time in the last seven months as indicated by the GDP. A sharp 3.4% jump in spending in the shops and online was the main factor behind the 0.2% growth in services in January, while construction rose by 1.1%. Production – which includes manufacturing – contracted by 0.2%. Over the three months to January, GDP was 0.1% lower than in the three months to October 2023 and was 0.2% smaller than in the three months ending in January 2023. Liz McKeown, the ONS director of economic statistics, said: “The economy picked up in January with strong growth in retail and wholesaling. Construction also performed well with housebuilders having a good month, having been subdued for much of the last year. “These were partially offset by falls in TV and film production, lawyers and the often-erratic pharmaceutical industry. “Over the last three months as a whole, the economy contracted slightly.” Financial markets had expected a pick up in activity after December’s 0.1% contraction, with the consensus forecast among economists a 0.2% increase. Although the UK remains in a shallow recession after output fell in the third and fourth quarters of 2023, the news of the slight rebound in growth came as a relief to the government. The chancellor, Jeremy Hunt, said in last week’s budget that the economy had turned the corner after a period in which action by the Bank of England designed to tackle high inflation led to slower growth. Responding to the January GDP figures, Hunt said: “While the last few years have been tough, today’s numbers show we are making progress in growing the economy – part of which makes it possible to bring down national insurance contributions by £900 this coming year. But if we want the rate of growth to pick up more we need to make work pay which means ending the unfairness of taxing work twice.” Rachel Reeves, Labour’s shadow chancellor, said: “After 14 years of economic decline under the Conservatives, Britain is worse off. Rishi Sunak’s claims that his plan is working are already in tatters after Britain was hit by recession last year.” In the final six months of 2023, the economy grew only once – by 0.2% in November. Every other month recorded a fall or stagnation in GDP. Yael Selfin, chief economist at KPMG UK, said: “Forward looking, indicators point to further strengthening of momentum in February, bolstering the prospect that the UK experienced a short and shallow recession. “Although economic performance has somewhat improved, the outlook remains relatively gloomy. Economic growth is not expected to materially pick up this year with demand impaired by the lingering impact of high interest rates. Meanwhile on the supply side, the sluggish outlook for business investment and weaker public sector investment will compound weakness in productivity and constrain long-term growth.”