The UK economy returned to growth in January, raising hopes that it will avoid a recession as activity bounced back from December's strike action.

As Jeremy Hunt prepares to deliver his first Budget, the Office for National Statistics (ONS) said the economy expanded 0.3pc in January after falling by 0.5pc in December.

This was above expectations for the economy to eke out growth of 0.1pc and raises hopes that the UK could avoid a technical recession - defined as two straight quarters of economic decline.

While activity in January was also marred by strikes, statisticians said the rebound was due to children returning to classrooms "following unusually high absences in the run-up to Christmas", as well football fans coming back to stadiums following December's World Cup in Qatar.

Darren Morgan, ONS director for economic statistics, said this was partly offset by a "notable" drop in construction, with a slowdown in infrastructure projects.

Closely watched survey data for February suggest the recovery could be sustained, amid a rebound in the country's dominant services sector. 

The Chancellor said the economy had "proved more resilient than many expected", which will reignite calls for more tax cuts in the Budget.

However, Mr Hunt warned that "there is a long way to go".

Commenting on the GDP figures, Mr Hunt said: “Next week, I will set out the next stage of our plan to halve inflation, reduce debt and grow the economy - so we can improve living standards for everyone."

Mr Hunt is expected to extend a £2,500 cap on energy bills for three months, which will help to shore up incomes and lower headline inflation, although most economists expect the economy to remain smaller than its pre-pandemic size until at least 2024.