UK economy shrinks 0.3% in March

Monthly real gross domestic product (GDP) is estimated to have fallen by 0.3% in March 2023, after showing no growth in February 2023, according to the latest figures from the Office for National Statistics (ONS).

Looking at the broader picture, the ONS said GDP grew by 0.1% in the three months to March 2023.

The services sector fell by 0.5% in March 2023, after an unrevised fall of 0.1% in February 2023, and was the main contributor to the fall in monthly GDP.

The largest contributor to the fall in services was a 1.4% fall in March 2023 for wholesale and retail trade; repair of motor vehicles and motorcycles.

Output in consumer facing services also fell by 0.8% in March 2023, after unrevised growth of 0.4% in February.

The ONS said there was “anecdotal evidence”, reported on monthly business survey returns, to suggest that industrial action in March 2023 had a “notable impact” on different industries of varying degrees.

It added an “exceptionally wet” March 2023 may have also played a part in reducing output for some industries. This was described as a reason for the decline in retail sales in March 2023 data.

ONS director of Economic Statistics Darren Morgan said: “Despite the UK economy contracting in March, GDP grew a little over the first quarter as a whole.

“The fall in March was driven by widespread decreases across the services sector. Despite the launch of new number plates, cars sales were low by historic standards – continuing the trend seen since the start of the pandemic – with warehousing, distribution and retail also having a poor month.”

He added: “These falls were partially offset by a strong month for manufacturing as well as growth in gas production and distribution and also in construction.Across the quarter as a whole growth was driven by IT and construction, partially offset by falls in health, education and public administration, with these sectors affected by strikes.”