The UK economic system stagnated within the ultimate quarter of 2022, narrowly avoiding a recession regardless of output shrinking by greater than anticipated in December.
Gross home product was unchanged between the third and fourth quarters of 2022, following a contraction within the earlier three months, in keeping with information revealed on Friday by the Office for National Statistics.
That was according to analysts’ expectations however was weaker than the 0.1 per cent enlargement anticipated by the Financial institution of England.
The flat studying means it prevented a technical recession, often outlined as two consecutive quarters of falling output.
The quarterly determine was boosted by progress in October and November. Nonetheless, the economic system shrunk by 0.5 per cent between November and December as widespread strikes and the price of dwelling disaster hit family funds and enterprise exercise. The studying was decrease than the 0.3 per cent contraction forecast by economists polled by Reuters.
Darren Morgan, ONS director of financial statistics, stated: “In December, public providers have been hit by fewer operations and GP visits, partly as a result of influence of strikes, in addition to notably decrease college attendance. In the meantime, the break in Premier League soccer for the World Cup and postal strikes additionally induced a slowdown.”
Within the fourth quarter, the UK economy was nonetheless 0.8 per cent under the extent in the identical interval of 2019, earlier than the pandemic. In distinction, the US economic system was up by 5.1 per cent over the identical interval and output within the eurozone grew by 2.4 per cent.
The Bank of England expects the UK economic system to contract this 12 months and within the first quarter of subsequent 12 months, as excessive power costs and better borrowing prices weigh on spending. Output won’t recuperate to its pre-pandemic ranges till 2026, in keeping with its calculations.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, expects output to fall within the first half of this 12 months as client confidence is low, the federal government is pausing its price of dwelling grants, and plenty of companies are reducing prices and suspending new initiatives in response to the rise of their borrowing prices. “The recession has been delayed, not averted,” he stated.
Chancellor Jeremy Hunt stated that “avoiding a recession exhibits our economic system is extra resilient than many feared”.
“Nonetheless, we’re not out of the woods but, notably with regards to inflation,” he added.