UK avoids recession but ‘not out of woods’

UK avoids recession but ‘not out of woods’

UK avoids recession but ‘not out of woods’

Britain’s economy avoided recession after flatlining in the last three months of 2022, but finance minister Jeremy Hunt warned on Feb. 10 it was “not out of the woods yet” over surging inflation.

Gross domestic product registered zero growth in the fourth quarter, in line with expectations after shrinking 0.3 percent in the previous three months, the Office for National Statistics (ONS) said in a statement.

German GDP in contrast unexpectedly shrank 0.2 percent in the same period as Europe’s top economy also battled fallout from the Russian invasion of Ukraine, recent data showed.

The ONS added on Feb. 10 that the U.K. economy expanded 4.1 percent last year, shrugging off decades-high inflation, after growth of 7.4 percent in 2021.

Nevertheless, sky-high consumer prices have sparked a cost-of-living crisis in Britain, and widespread industrial action that weighed on December’s performance.

“We are not out the woods yet, particularly when it comes to inflation,” Hunt said, but also noted that “our economy is more resilient than many feared.”

The technical definition of a recession is two straight quarters of negative growth.

“In December public services were hit by fewer [hospital] operations and ... visits [to see doctors], partly due to the impact of strikes, as well as notably lower school attendance,” said ONS economic statistics director Darren Morgan.
“Meanwhile, the break in Premier League football for the World Cup and postal strikes also caused a slowdown.”