The rise, driven by a rebound in retail sales and robust construction activity, aligns with market expectations and could signify the start of a sustained economic upturn.

While the manufacturing sector continues to struggle, largely due to a slowdown in North Sea oil investment, the dominant services industry, particularly consumer-facing services, recorded a 0.6% quarterly growth. The construction sector also saw a notable 1.1% increase in output over the three months to January.

The EY ITEM Club anticipates further GDP growth in February, bolstered by fewer working days lost to industrial action and stronger business survey data. However, the lagged effects of past interest rate hikes and tighter fiscal policies are expected to constrain the pace of the recovery, resulting in a steady rather than spectacular rebound.

Martin Beck, chief economic advisor to the EY ITEM Club, noted that “the lagged effects of past interest rate hikes and tighter fiscal policy” are likely to constrain the “pace of the uptick”, adding that the NI contributions cut would only offset “part of the impact of frozen tax thresholds”.