UK economy shows zero growth, narrowly avoiding recession

People browse stalls at a street market in east London, Britain, Feb 4, 2023. REUTERS/Henry Nicholls

LONDON  – Britain’s economy showed zero growth in the final three months of 2022, figures from the Office for National Statistics showed on Friday, meaning it narrowly avoided entering recession.

Economists polled by Reuters had forecast zero growth for the fourth quarter of the year.

Monthly GDP data for December – a month marked by widespread rail strikes and bad weather – showed a 0.5-percent contraction, larger than the 0.3 percent forecast.

“The economy contracted sharply in December meaning, overall, there was no growth in the economy over the last three months of 2022,” said ONS statistician Darren Morgan said.

The Bank of England forecast last week that Britain would enter a shallow but lengthy recession, starting in the first quarter of this year and lasting five quarters.

British living standards have been hammered by a surge in inflation, which hit a 41-year high of 11.1 percent in October, and firms and households will also feel an increasing impact from the BoE’s rapid increase in interest rates since December 2021.

Finance minister Jeremy Hunt said the data showed the British economy was more resilient than expected, but still not clear of danger.

“We are not out the woods yet, particularly when it comes to inflation,” he said in a statement.

“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.”