UK economy managed to avoid recession in Q4
2023.02.10 04:24
UK economy managed to avoid recession in Q4
By Ray Johnson
Budrigannews.com – Although Britain’s economy experienced zero growth in the final three months of 2022, which was sufficient to prevent it from entering a recession for the time being, the country faces challenging prospects in 2023 as households struggle with double-digit inflation.
The Office for National Statistics reported that monthly data on gross domestic product for December, a month marked by widespread rail strikes and severe weather, showed a contraction of 0.5%, exceeding the forecast of 0.3%.
According to ONS statistician Darren Morgan, “the economy contracted sharply in December meaning, overall, there was no growth in the economy over the last three months of 2022.”
In the three months leading up to the end of September, when many businesses temporarily shut down to commemorate Queen Elizabeth’s funeral, output decreased by 0.2%. A second quarter of declining output would have met Europe’s usual definition of a recession.
However, the respite is probably only brief.
Last week, the Bank of England predicted that Britain would enter a brief but prolonged recession that would last for five quarters and begin in the first quarter of this year.
The surge in inflation, which reached a 41-year high of 11.1% in October, has hurt British living standards. The BoE’s rapid increase in interest rates since December 2021 will also have an increasing impact on businesses and households.
In stark contrast to other major advanced economies that are now larger than they were prior to the pandemic, output in the fourth quarter was still 0.8% below its level before the pandemic.
James Smith, an economist at ING, predicted that Britain’s economy would shrink by 0.3-0.4 percent in the first quarter of this year and by a smaller amount in the second.
“The base case, or at least a technical recession, remains. “However, the collapse in wholesale gas prices, of course, helps to ensure that this will be very mild by historical standards,” he stated.
After experiencing 7.6% growth in 2021, Britain’s economy grew by 4.0% in 2022 as a whole to recover from a historic blow from the COVID-19 pandemic.
Jeremy Hunt, minister of finance, stated that the data indicated that the British economy was more resilient than anticipated, but it was still not entirely safe.
“The UK economy has some inherent resilience, but we are not out of the woods yet because inflation is still far too high. That is causing suffering for families across the nation,” he stated.
