UK Q1 GDP growth unrevised at 0.1 quarteronquarter
Economy remains 0.5 smaller than before COVID19
Britons dig into savings as inflation erodes earnings
First net withdrawal from bank accounts since 1987
Business investment rises before tax incentive ends

LONDON, June 30 Reuters Britain39;s economy made a lacklustre start to 2023 as inflation ate into households39; disposable income, official figures showed on Friday, and economists expect higher interest rates to keep up the pain even as inflation eases.

Friday39;s figures showed no change to the Office for National Statistics39; ONS initial estimate of 0.1 quarterly gross domestic product GDP growth for the first three months of 2023, leaving output 0.5 lower than it was in the final quarter of 2019, before the COVID19 pandemic.

Households dug into their savings although the overall savings ratio remained higher than before the pandemic and the cost of living increased faster than incomes.

The squeeze on households looks set to continue, as the Bank of England raised interest rates to a 15yeara high of 5 in June and investors see little sign that it is about to end its tightening cycle, as inflation has stayed higher than expected.

The final Q1 2023 GDP data confirms that the economy steered clear of a recession at the start of 2023. But with around 60 of the drag from higher interest rates yet to be felt, we still think the economy will tip into one in the second half of this year, Ashley Webb, UK…