UK economy returns to growth, alleviating imminent recession fears

The UK economy picked up growth in January after contracting last month, alleviating fears of an imminent recession.

Monthly real GDP is estimated to have increased by 0.3% in January, after falling by 0.5% in December 2022, according to the latest data from the Office for National Statistics (ONS).

Economists said December’s GDP figures were impacted by days of rail and postal strikes, and January’s output fell as football’s Premier League took a break for the World Cup, resulting in lower output in the entertainment sector. GDP growth is not surprising.

Epoch Times photo
Treasury Secretary Jeremy Hunt (R) and Energy Secretary Grant Shaps speak at a meeting of senior leaders across the UK green industry at Queen Elizabeth Olympic Park in East London, 21 February 2023. (Stéphane Rousseau/PA Media) )

The services sector grew 0.5% in January, after declining 0.8% in December 2022. This is primarily driven by education, transportation and entertainment.

But in the big picture, GDP was flat in the three months to January 2023.

Darren Morgan, Director of Economic Statistics, ONS said: But overall the economy has shown zero growth over the last three months, and indeed over the last 12 months.

“The main drivers of growth in January were the return of children to classrooms after an unusually high number of absences leading up to Christmas and the return of Premier League clubs to full schedules after the World Cup. , and private healthcare providers also a strong month.

“The postal service has also partially recovered from the impact of the December strike.”

“On the ground that is weaker than it looks”

Despite the overall rise, the new figures also point to a decline in production in both manufacturing and construction.

Output fell by 0.3% in January 2023 after increasing by 0.3% in December 2022.

The construction sector fell 1.7% in January after being flat in December.

“Beneath the surface, the numbers suggest the economy is on a weaker base than it appears,” said Ruth Gregory, deputy chief UK economist at Capital Economics.

She added that the strikes in February may have hurt growth, and that parts of the economy have yet to feel the effects of successive rate hikes.

“Therefore, we do not expect the strength of January to continue and there is a premonition that the recession will continue,” she said.

“More resilient than expected”

Prime Minister Jeremy Hunt, who is due to submit his spring budget on 15 March, welcomed the new GDP figures.

he said:

“Next week, I will embark on the next phase of my plan to halve inflation, reduce debt and grow the economy, so we can improve living standards for all.”

But the main opposition Labor Party has accused the Conservative government of failing to grow the economy.

Labour’s shadow prime minister, Rachel Reeves, said the GDP figures showed the economy was “ticking along this Conservative path of controlled decline”.

She added:

“What we need now is the ambition to grow the economy so that every part of the UK feels better, and it’s the Labor Party’s promise to ensure the highest sustained growth in the G-7. mission is fulfilled.”

In an interview with Times Radio, Foreign Secretary James cunningly blamed international factors such as Russia’s invasion of Ukraine for slow GDP growth.

he said: Of course, we would like to see a higher growth rate, but there are major headwinds in the international economy.

“Russia’s illegal and unjustified aggression in Ukraine is driving up fuel prices, driving up food prices, all of which is hurting the UK economy.”

“I’m not out of the woods yet.”

Small Business Alliance Policy Chair Tina McKenzie said: small company. ”

Confederation of British Industry Chief Economist Ben Jones said: However, given the headwinds of high inflation, still-high energy prices and rising interest rates, activity may be restrained in the short term. Sentiment is improving, however, and business leaders are hoping for a more stable business environment in the second half of the year. ”

He tells the government to use the next budget to “overcome common economic headwinds by tackling the barriers that are holding businesses back,” including labor shortages and a planned corporate tax hike. I urged you to

PA Media contributed to this report.