The G7 growth table makes uncomfortable reading for the UK, and not for the first time. It will raise concern that poverty levels will rise as people struggle to make ends meet.
The nation managed to avoid the expected winter recession, regardless the UK is still “bottom of the G7 league table” for growth since the Coronavirus pandemic.
It comes as the world economy is entering a “perilous phase” of low economic growth and high financial risk, the International Monetary Fund has warned.
It’s chief economist Pierre-Olivier Gourinchas added that there were also more severe risks in prospect.
He said: “We are… entering a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner.”
Today’s GDP report shows that the UK economy was still 0.5% smaller in the first quarter of this year than in the last quarter of 2019 – just before Covid-19 hit the global economy.
In contrast, France’s economy is 1.3% larger, and Germany is just 0.1% smaller than in Q1 2019.
But the US economy is 5.3% bigger. The US economy benefited from several large stimulus packages and is not as reliant on the energy instability that rocket Europe after Russia invaded Ukraine.
There is some good-ish news, the UK has received an upgrade to its economic growth forecast this year and next, but it is nonetheless forecast to be the worst performing economy in the G7 this year.
However, Samuel Tombs, economist at Pantheon Macroeconomics, said: “The U.K. remains the only G7 country in which the main quarterly measure of GDP has not recovered to its pre-Covid peak yet; it still was 0.5% below its Q4 2019 level in Q1.
“This chiefly reflects weakness in households’ real spending, which was 2.3% below its Q4 2019 level. But at least the magnitude of the underperformance is not increasing relative to other countries in Europe, which have faced a similarly enormous energy price shock.”
TUC General Secretary Paul Nowak said: “Rishi Sunak still doesn’t have a plan to stimulate growth and get us out of this rut. And his ministers are making things worse by holding down pay while inflation is over 10%.
“Without pay growth, families are forced to cut back their spending, and business lose customers. That’s why a competent government would put pay growth at the heart of the UK’s economic plan.”