U.K. economy stagnates during final three months of 2022
LONDON –
The British financial system stagnated within the last three months of final yr because the nation struggled underneath the load of a cost-of-living disaster that’s squeezing family budgets, crimping business funding and fueling labor unrest.
The Office for National Statistics stated Friday that gross home product, the broadest measure of financial exercise, didn’t develop in the course of the fourth quarter of 2022. Monthly estimates recommend that financial exercise slowed on the finish of the yr, with output shrinking 0.5% in December.
However, the figures confirmed that Britain dodged a second consecutive quarter of contraction, which is one definition of a recession. Britain would not have an impartial physique that declares recessions like within the U.S. and Europe, the place official panels use a wide range of financial information, together with unemployment and client and business spending, to make their assessments.
While the U.Ok. averted a “technical recession,” strikes by prepare drivers, medical employees and different public-sector staff added to the slowdown in December, stated Suren Thiru, economics director on the Institute of Chartered Accountants in England and Wales.
“The U.K. is facing a particularly brutal year with high inflation, stealth tax rises and the lagged impact of numerous interest rate hikes still likely to push us into a summer downturn by hammering incomes and confidence,” Thiru stated.
Overall, the financial system expanded 4% for the yr, greater than another member of the Group of Seven superior economies.
But that development occurred within the early a part of the yr, earlier than Russia’s invasion of Ukraine sparked sharp rises in meals and power costs.
Inflation within the U.Ok. stays at ranges final seen within the early Eighties, squeezing family budgets and crimping business funding. Consumer costs rose 10.5% in December from a yr earlier after peaking at 11.1% two months earlier.
In an effort to sluggish inflation, the Bank of England has raised rates of interest 10 instances since December 2021, rising the price of mortgages, bank cards and business loans.
The National Institute of Economic and Social Research warned earlier this week that 2023 will “certainly feel like a recession,” as persistent inflation, sluggish development and rising taxes squeeze family incomes.
About one in 4 U.Ok. households — some 7 million households — will not find a way pay meals and power payments from their post-tax earnings within the 2023-24 monetary yr, up from one in 5 in 2022-23.
The International Monetary Fund final month forecast that the U.Ok. can be the one main financial system to shrink this yr, even because the outlook for the remainder of the world improves.
Amid the gloom, Treasury chief Jeremy Hunt selected to concentrate on the expansion within the U.Ok. financial system over the entire of 2022, which he stated confirmed Britain was extra resilient than many feared.
“However, we are not out the woods yet, particularly when it comes to inflation,” Hunt stated. “If we stick to our plan to halve inflation this year, we can be confident of having amongst the best prospects for growth of anywhere in Europe.”
