FTSE 100 at highest close in a year as UK recession enters ‘rearview mirror’ – as it happened

Chancellor cheers 0.1% rise in GDP, but IoD fears economy still fragile

• Bank of England forecasts undermined by out-of-date-methods, report finds
• UK takes another step on path to exit recession as GDP rises

City experts sound confident that the UK economy will pull itself out of recession.

Today's news that the economy grew by 0.1% in February and 0.3% in January bolsters hopes that GDP did not shrink in the January-March quarter.

The UK has continued its positive start to the year as GDP grew again in February, albeit only marginally, and looks on course to be pulled out of the short and shallow recession it entered at the end of last year.

UK GDP is estimated to have risen 0.1% in February, a slight dip compared to January's 0.3% growth which was revised up from 0.2%, but still positive nonetheless. This uptick was driven primarily by improvements in the UK's services and production sectors.

The UK economy grew, albeit very modestly, in February, suggesting that any sort of meaningful recession will be avoided.

With inflation tracking back, the Bank of England might be persuaded to start cutting rates sooner rather than later and after the CPI data out of the US and the ECB meeting over the last week, we could well see the Fed being the last of the three to take any action on rates. That would quite a shift over a period of a few months."

Despite weaker momentum in February, the economy's ongoing recovery is the latest piece of evidence that the shallow technical recession is already behind us. Growth was helped by the January cut in National Insurance, a further boost to purchasing power from falling inflation, and an easing in cost pressures for businesses. Combined with more timely survey data, we expect GDP to grow at around 0.3% over Q1.

Nonetheless, there are limits to the UK's growth potential this year. Consumer spending remains fragile. Business investment could be dented by uncertainty related to the general election and growing speculation around a second fiscal event in the Autumn, while weakness in the housing market could further drag on construction by lowering the return on new housebuilding.

These figures are a welcome sign that the economy is turning a corner, and we can build on this progress if we stick to our plan.

Last week our cuts to National Insurance for 29 million working people came into effect across Britain, as part of our plan to reward work and grow the economy."