According to updated data, the UK economy has now surpassed pre-pandemic levels. Despite February's flatlining, there are increasing chances that growth will surpass official projections for the first three months of 2023.
Gross domestic product was unchanged between January and February, following a revised 0.4 per cent expansion in the previous month, the Office for National Statistics said.
However, as a result of data revisions from earlier months, the economy ended the month 0.3 percentage points larger than it had been in February 2020, prior to the implementation of the first Covid-19 limits. The ONS forecast that the GDP was 0.2% below that level in January 2023.
The likelihood of avoiding a recession in the first quarter, according to chief UK economist Paul Dales, increased the likelihood that the BoE would increase interest rates once more to stifle demand and bring inflation, which is currently at 10.4%, down to its target of 2%.
Markets are split between the central bank’s Monetary Policy Committee raising the base rate by 0.25 percentage points at its next meeting on May 11 or leaving it at 4.25 per cent. “The overall sense is that the economy is still proving resilient to the twin drags of high inflation and high interest rates,” said Dales.