The UK economy grew 2.4% in March, beating expectations as the vaccine-driven recovery picked up speed

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The UK economy grew 2.4% in March, beating expectations as the vaccine-driven recovery picked up speed
The UK economy is gradually reopening from coronavirus lockdowns.Phil Noble/Reuters
  • The UK economy grew 2.4% in March, beating economists' expectations.
  • Britain's government hopes to lift all restrictions in July, aided by a rapid vaccine rollout.
  • The Bank of England expects UK GDP to grow 7.25% in 2021, more than previously thought.

The UK economy grew 2.4% in March as business and consumer optimism grew as COVID-19 cases fell and the vaccination drive picked up speed, according to the latest estimates released on Wednesday.

Britain's gross domestic product shrank 1.6% in the first quarter compared to the previous three months, a downward revision by the Office for National Statistics from the initial 1.5% estimate. The drop was driven by a bigger-than-expected fall in consumer spending.

However, figures released earlier in June showed that UK GDP grew 2.3% in April. That left the economy around 3.7% smaller than before the COVID-19 pandemic in February 2020, although those figures may also be revised.

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The pound was down 0.11% against the dollar at $1.383 on Wednesday. Britain's FTSE 100 stock index was 0.1% lower.

"Today's GDP release cemented the fact that growth contracted in Q1, but this is fading fast in the rear-view mirror as recent monthly data points to a much rosier picture for the UK economy," Jonathan Sparks, UK chief investment officer at HSBC Private Banking, said.

Paul Dales, chief UK economist at Capital Economics, said: "GDP rose in each of February, March and April." He added: "The further reopening in the economy since then means a lot of that gap will have been closed in May and June."

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Britain has been one of the fastest countries in the world to vaccinate its population against coronavirus. More than 65% of people have now received at least their first dose, according to Our World In Data.

It also has one of the highest death tolls from COVID-19 in the world, with over 128,000 fatalities.

The vaccine rollout has allowed the government to gradually reopen parts of the economy, although rising cases caused a delay in June. However, ministers now hope that the final restrictions can be lifted in July.

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The Bank of England said in May that it expects UK GDP to grow 7.25% in 2021, up from a prediction of 5% growth made in February.

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