Britain’s economy avoided recession at the end of 2022 by a slightly more comfortable margin than originally estimated, data showed on Friday, but pressures remain with inflation clinging to more than double digits. The UK saw its Gross Domestic Product (GDP) grow by 0.1% in the fourth quarter of 2022, a figure revised slightly upwards on Friday by the Office for National Statistics (ONS), which had initially reported zero growth for this period. In the third quarter, GDP fell by 0.1%, once again revised slightly upwards (-0.2% previously).
Best performance in the telecommunications, construction and manufacturing industry
These new data confirm that the UK avoided falling into a technical recession at the end of 2022, the generally accepted definition of which is two consecutive quarters of contraction. “The economy performed slightly better in the second half of last year than previously estimated,” boosted in particular by better performance in the “telecommunications, construction and manufacturing” sectors, said Darren Morgan, director of economic statistics at the ONS, on Twitter. .
The UK also grew by 0.3% in January, more than expected, according to ONS data released in early March. “There is little meaningful difference between a stagnant economy and one that is growing slightly,” said Martin Beck, an economist at EY Item Club.
But Friday’s GDP revision remains “the latest in a series of positive surprises that suggest the economy has shown a welcome degree of resilience” despite the pressures. Last Friday, various indicators reported better-than-expected retail sales and activity growth since the start of the year, against a backdrop of mildly renewed optimism.
A contraction of 0.2% in 2023
The British economy remains under pressure, however, and fears of recession are not dissipating for this year, in a country facing a severe cost-of-living crisis, with inflation above 10% for months – and which has picked up at 10.4% annual-. the year in February. Interest rate hikes by the Bank of England to counter inflation will weigh further on activity, said Ruth Gregory, an analyst at Capital Economics. “We still think the economy will go into recession this year,” she said.
GDP was 0.6% below what it was before the arrival of Covid in the fourth quarter, according to the ONS, while the British economy is the only G7 economy that has not yet recovered its pre-pandemic level. For its part, the OBR, a public budget forecasting agency, estimated in March that the country would once again narrowly escape the technical recession this year. According to this organization, the British economy should contract a total of 0.2% in the year due to a soft spell expected only in the first quarter, before picking up during the rest of the year but also in the coming years.
Faced with price increases, the British authorities announced on Friday a record increase in the minimum wage (+9.7%). In addition, the purchasing power crisis, the gloomy economic outlook and rising interest rates continue to weigh on the UK property market. Prices, which had skyrocketed with the pandemic, began to decline at the beginning of the year and fell faster than expected in March (-3.1% yoy), the biggest annual drop since July 2009, according to an index released on Friday by the Nationwide real estate credit and development company.
Source: BFM TV
