British economy rebounds strongly in January

Gross domestic product (GDP) grew by 0.8% after a 0.2% decline in December

Britain’s economy rebounded much more than expected in January from its coronavirus-related lull in late 2021, according to data on Friday that likely adds to the case for Bank of England policymakers to raise interest rates next week.

The Office for National Statistics said gross domestic product grew by 0.8 per cent in month-on-month terms in January after a 0.2 per cent decline in December. That was more than forecast by any economist in a Reuters poll which had pointed to growth of 0.2 per cent.

All the main sectors of Britain’s economy grew by more than expected, with the wholesale and retail sector being a particular driver of the vast services sector, the ONS said.

Last month the BoE said the economy looked set to grow around 3.75 per cent this year, with inflation peaking at around 7.25 per cent in April - but those forecasts have already been eclipsed by the consequences of Russia’s invasion of Ukraine for financial markets and international trade.

Still, the strength of the economy shown in Friday’s data - in addition to soaring inflation - will likely bolster bets that BoE policymakers will raise interest rates next week for the third time in the space of three months.

- Reuters