The UK economy eked out growth of 0.1% in the first quarter, according to figures from the Office for National Statistics (ONS).
The figure was unrevised and in line with City forecasts.
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The services sector grew by 0.1% in the quarter, driven by increases in information and communication, and administrative and support service activities; elsewhere, the construction sector grew by a revised 0.4% (previously 0.7%), while the production sector grew by 0.1%, with a revised 0.6% growth in manufacturing (previously 0.5%).
The household saving ratio fell to 8.7% from 9.3% in the fourth quarter of 2022 while real households' disposable income slipped by 0.8% following positive growth of 1.3% in the previous quarter.
Households experienced simultaneous withdrawals from their deposit accounts and negative secured loans for the first time ever, the ONS said
Danni Hewson at AJ Bell said that despite the UK “limping through” the first few months of the year, “warning signs are already flashing madly”.
She noted household disposable income was being further eroded by the constant pain of price rises while fewer people have the ability to put a bit away for a rainy day or take advantage of the interest rate hikes which are causing such misery for so many.
Samuel Tombs at Pantheon Macroeconomics thinks that the economy will avoid a recession over the coming quarters, with a gradual recovery in households’ real expenditure offsetting emerging weakness in business investment.
“We think the GDP probably held steady in Q2, and then will rise by about 0.4% quarter-on-quarter in Q3 and 0.2% in Q4,” he added.