The UK economic system stagnated within the closing 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 Workplace for Nationwide 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 averted 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 residing 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, mentioned: “In December, public companies had been hit by fewer operations and GP visits, partly because of the impression 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 economic system was nonetheless 0.8 per cent beneath 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 Financial institution of England expects the UK economic system to contract this yr and within the first quarter of subsequent yr, as excessive vitality costs and better borrowing prices weigh on spending. Output is not going to 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 yr as client confidence is low, the federal government is pausing its price of residing grants, and plenty of companies are chopping prices and suspending new initiatives in response to the rise of their borrowing prices. “The recession has been delayed, not averted,” he mentioned.
Chancellor Jeremy Hunt mentioned that “avoiding a recession reveals our economic system is extra resilient than many feared”.
“Nonetheless, we aren’t out of the woods but, notably in relation to inflation,” he added.