Having fallen into a mild recession at the end of last year, with the economy contracting for two consecutive three-month periods, the economy grew by 0.6% in first quarter.

It was the strongest quarterly rate of growth since the end of 2021, outperforming economists’ expectations of 0.4% growth.

The growth was spearheaded by the services sector which has boomed since the start of 2024 with wages outstripping inflation to ease the pressures on consumers.

Liz McKeown, Director of economic statistics at the ONS, attributed growth to the “broad-based strength across the service industries with retail, public transport and haulage, and health all performing well.”

On Thursday, the Bank of England froze interest rates at 5.25% for the sixth time in a row but indicated that cuts could begin again in June.

Derek Mackenzie, CEO of Investigo, part of The IN Group, said: “Teetering on the edge of recession has taken a toll on UK businesses. Economic uncertainty has impacted investment and critical business decisions, resulting in short versus long-term planning. But with green shoots now appearing, boardrooms can plan for a more stable future and focus on key areas such as technology to lead growth. Those that align their business and technology strategies, fuelled by investment, will be best placed once the economy surges.

“In fact, four in five boardrooms are gearing up for technology investment over the next 12 months, with 78% focused on automation to cut costs and drive efficiencies according to our Tech and the Boardroom report. Technology isn’t slowing down for anyone, so it’s important that technology transformation is led from the C-suite and that they understand the power that automation can bring to catapult operational efficiency.”

SMEs have been experiencing challenges in securing funding during the recession with research indicating as many as four in 10 SMEs experienced a fall in employment during the recession, and five in 10 a fall in sales.

Sinead McHale, CEO, Satago said: “The UK's exit from recession offers a beacon of hope for SMEs amid economic uncertainty, signalling potential avenues for growth. However, despite easing inflation, business costs remain high. SMEs will face continued challenges around profitability and sustainability, which will warrant sensible financial management.  

“Amidst wider economic challenges, SMEs must aptly manage cash flow and credit, considering external financing for expansion with a strategic risk-balancing approach. Prioritising innovation, especially through AI adoption, will help boost productivity and uncover growth opportunities. Meanwhile, early integration of sustainable cashflow management practices such as invoice financing not only aligns with market trends but also enhances resilience for SMEs against future challenges.  

“By engaging with support networks, fostering cashflow resilience, and embracing innovation, SMEs can confidently navigate the current economic landscape, paving the way for success in 2024 and beyond.”