Six things we now know about the UK economy in charts

Faisal Islam, Economics editor

The UK economy is exhibiting a level of resilience that has surprised many analysts, including the International Monetary Fund (IMF), which previously anticipated that the UK would experience the most significant adverse effects from the Iran war.

To gain a clearer understanding of the current economic landscape, an examination of the data is warranted, particularly in terms of public sentiment regarding the economy.

Below are six charts that elucidate the current state of affairs.

1. The economy was strong, despite the Iran war

Recent official economic data indicates that the economy experienced a growth of 0.6% in the first quarter, covering the period from January to March. This growth is notably stronger than the recent trend of slower economic performance.

This figure is respectable, particularly given the context of ongoing conflict related to the Iran war during the final month of the quarter.

It is important to observe, however, the recurring trend in recent years of early-year growth that tends to diminish later on.

2. Growth per person was healthy too

Economic growth figures can sometimes be skewed by population growth; an increase in the workforce typically translates to heightened economic activity and, consequently, growth.

To assess whether individuals are experiencing improved conditions, one method is to examine GDP on a per capita basis.

Although this metric has seen sluggish growth over recent years, reflecting stagnant living standards, the latest figures represent the fastest growth observed in four years, tracing back to the energy crisis that followed Russia’s invasion of Ukraine.

3. UK compares well to other advanced economies

With the impact of the Iran War felt globally, it is instructive to compare the UK's performance against other G7 nations.

At present, the UK is the fastest-growing economy among these major nations—though Japan has yet to release its figures, projections suggest its growth will trail that of the UK.

The IMF had forecasted last month that the UK would face the most severe economic repercussions in the G7. While it is early in the evaluation period, this prediction has not yet materialized.

This resilience may be attributed to the safeguarding of household energy bills, as well as the possibility that the energy crisis, predominantly linked to oil rather than gas, has less severely impacted the UK, thanks to the nation’s decreased sensitivity to gas price fluctuations in recent years.

4. Some industries helped the economy grow

Growth has been observed across various sectors, including services, construction, and manufacturing. An uptick in wholesale and retail trade indicates a more robust consumer base.

Furthermore, the professional, scientific, and information and communications sectors have performed well, aligned with significant investment activity in the UK tech sector, often referred to as "Britmaxxing."

5. Other sectors struggled

Despite overall growth, certain sectors are beginning to show signs of difficulty, notably due to increases in fuel and chemical costs.

The machinery and equipment sector has experienced a downturn, as have administrative services activities.

A sector to monitor closely is house building, particularly in light of rising fixed mortgage rates.

6. Consumers are feeling less confident

While the resilience displayed thus far is commendable, recent consumer confidence metrics indicate the adverse effects of soaring fuel and mortgage costs, which may hinder future growth.

It is not surprising that both the Chancellor and the Prime Minister are eager for a resolution to the conflicts in the Gulf and the reopening of the Strait of Hormuz.

Although the UK economy began to show signs of recovery at the start of the year, developments in the Gulf could potentially derail this progress.