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British manufacturers have continued their first month of growth for almost two years as the economy recovers.
In another sign that last year’s recession is well and truly over, S&P Global said its index of British factory activity rose to 50.3 in March from 47.5 in February.
It was the first lecture on the crucial level of 50 that separates growth and decline for twenty months.
“The long decline in industrial production is over,” said Rob Wood, chief Britain economist at Pantheon Macroeconomics.
Analysts believe that cuts in taxes and interest rates will further boost the economy as the year progresses.
Production boost: new cars on the production line at Nissan’s Sunderland plant. S&P Global said its index of UK factory activity rose to 50.3 in March from 47.5 in February
But with Labor comfortably ahead in the polls, that may not be enough to save the Tories at the general election expected later in 2024.
As the UK economy recovers, the Eurozone recorded a score of just 46.1 as the region suffered another deterioration.
The region was followed by France and Germany, which recorded values of 46.2 and 41.9 respectively.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, described the figures as “disheartening.”
He said: “The Eurozone manufacturing sector is generally running on multiple cylinders, especially Germany, France, Italy and Spain.
Together they account for three quarters of the manufacturing industry in the eurozone.
‘We have the unusual situation that two cylinders, Germany and France, are more or less out of action. A sustainable economic turnaround can only be expected when all cylinders are firing again.’
Britain fell into recession late last year, when a 0.1 percent decline in economic output in the third quarter was followed by another 0.3 percent decline in the fourth quarter.
However, Europe managed to avoid the recession, even though there was no growth across the EU in the third or fourth quarter of last year.
In the eurozone, output fell 0.1 percent in the third quarter but remained stable in the last three months of 2023, also avoiding a recession.
But while much of Europe continues to struggle – and Germany in particular – the recession in Britain is widely considered to be over.
RSM economist Tom Pugh hailed the “green shoots of recovery” in Britain and said the “encouraging” manufacturing figures “add to evidence that last year’s recession is already over”.
He said the recession will be “one of the smallest and shortest on record” and continued: “We expect the economy to gradually gain strength over the rest of the year as lower inflation, falling interest rates and tax cuts drive consumer growth. expenditure.’
Separate figures from Nationwide show house prices fell unexpectedly by 0.2 per cent last month, after rising 0.7 per cent in February.
But data from the Bank of England shows mortgage lending is at its highest level in 17 months, a sign that confidence is returning.