UK economy surpasses pre-Covid peak 

The ONS maintained an initial estimate of 0.8% in Q1 2022 – down from 1.3% the previous quarter. It recorded year-on-year growth as 8.7% - both figures were in line with the organisation’s initial estimates.

IT, transport and manufacturing were the main drivers of economic growth in Q1 2022. However, rising inflation meant households’ disposable income dropped by 0.2% in the first quarter of the year – the fourth consecutive decline.

Consumer price inflation has hit 9.1 per cent and will peak at above 11 per cent in October, according to the Bank of England (BoE), driven mainly by the rising cost of energy and food.

Economists widely expect that a combination of higher national insurance contributions, additional bank holidays over the Jubilee weekend and growing inflation will cause growth to turn negative in the three months to June, the first quarterly GDP fall since the start of last year.

“Our latest estimate for economic growth in the first quarter is unrevised as a whole, showing the UK continued to recover from the pandemic,” Darren Morgan, director for economist statistics at the ONS, said.

“Both household incomes and spending rose in cash terms in the first quarter, leaving the rate of saving unchanged. However, once taking account of inflation, incomes fell again, for the fourth consecutive quarter.”

The UK is on track to be the worst performing developed world economy this year. Andrew Bailey, governor of the BoE, repeated warnings this week that households were facing sharp falls in real incomes, a factor that will depress growth for the next three years. The BoE expects UK GDP to remain stagnant until 2024.