The UK is “not out of the woods” despite avoiding a recession by a tiny margin last year, Chancellor of the Exchequer Jeremy Hunt has warned.
The country’s GDP was flat in the last three months of 2022, according to new data released by the Office for National Statistics (ONS) on Feb. 10.
The ONS said that when counting to two decimal places, the UK eked out a tiny 0.01 percent growth in the fourth quarter. The figure might be revised in late March when the ONS looks again.
A negative GDP growth figure for the quarter would have pushed the economy into recession, which is defined as two consecutive quarters of declining GDP.
GDP had fallen 0.2 percent in the previous quarter.
Monthly real GDP is estimated to have fallen by 0.5 percent in December 2022, following a growth of 0.1 percent in November.
Darren Morgan, ONS director of economic statistics, said: “The economy contracted sharply in December meaning, overall, there was no growth in the economy over the last three months of 2022.
“In December public services were hit by fewer operations and GP visits, partly due to the impact of strikes, as well as notably lower school attendance. Meanwhile, the break in Premier League football for the World Cup and postal strikes also caused a slowdown.
“However, these falls were partially offset by a strong month for lawyers, growth in car sales, and the cold snap increasing energy generation.”
He said the economy grew 4 percent across 2022. “Despite recent squeezes in household incomes, restaurants, bars, and travel agents had a strong year. Meanwhile, health and education also began to recover from the effects of the pandemic.”
Commenting on the new GDP figures, Chancellor Jeremy Hunt said: “The fact the UK was the fastest growing economy in the G-7 last year, as well as avoiding a recession, shows our economy is more resilient than many feared.
“However, we are not out the woods yet, particularly when it comes to inflation.
‘Worrying Developments’
But Ben Jones, lead economist at the Confederation of British Industry, said, “We may have avoided a technical recession late last year, but we probably won’t avoid one this year.”“All eyes are on the chancellor’s March budget, when businesses will be looking for a bolder approach to tackling labour and skills shortages and falling business investment,” he added.
David Bharier, head of research at the British Chambers of Commerce, said the latest GDP estimates show “some worrying developments.”
He said production output fell by 0.2 percent in the last quarter, and eight of the 14 service sectors saw contractions.
“Small businesses have seen three years of economic shocks, including lockdowns, global supply chain crises, Brexit, and soaring energy costs,” he added.
“Our research has shown that most small firms have seen no improvements to sales, exports, or investment. Retailers and hospitality firms are among the worst affected by this current anaemic economy.”
Bharier said, “There is some relief ahead in falling energy prices and with the potential peak in inflation, but firms face other headwinds, including continuing strike action and further uncertainty around our trading relationship with Europe.”
‘Wake-Up Call’
Rachel Reeves, shadow chancellor of the main opposition Labour Party, said she hopes that the data will wake up the government.Speaking to broadcasters during a visit to Bolton, Reeves said: “I hope today’s numbers are a wake-up call to the government because the economy now is just flatlining along the bottom.
“We’re the only major G-7 economy that is still smaller than it was before the pandemic, and zero growth is not a success.
“The government now urgently need to put in place a real plan for economic growth, as well as tackling the cost-of-living crisis that is affecting so many families and pensioners right now.”
The Liberal Democrats said the latest economic data was owing to “gross incompetence and mismanagement” of the UK’s finances by the Conservative Party.
The party’s Treasury spokeswoman Sarah Olney said: “Britain is dangling on over the edge of a recession after months of economic vandalism and chaos in government.
“The blame for these gloomy figures lies squarely with the government, who have botched budgets, failed to tackle inflation, and have no plan for growth. The Conservative Party hasn’t a shred of economic competence left.
“This government has hiked taxes to record levels and done nothing to stimulate economic growth.
“Businesses are now drowning in mountains of red-tape because of failed trade deals which has stifled all hope of an economic recovery after the pandemic. Gross incompetence and mismanagement of the country’s finances has led to this point.”
