Economy ‘more resilient than many feared’, Hunt narrowly insists UK

According to newly released Office for National Statistics (ONS) figures, the economy narrowly avoided recession in the second half of last year. This is despite growth decelerating sharply in December.

The ONS reported that output was flat at zero per cent between October and December.

If the figure were negative, the UK would meet the technical definition of a recession as the economy contracted for two consecutive quarters. Earlier, GDP was reported to have contracted by 0.3 percent between July and September.

Among the factors helping the UK escape was a surge in travel agents, which grew 14.8 percent in the last three months of the year after falling in the previous quarter. The construction industry had moderate growth of 0.3 percent.

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Reacting to the ONS figures, Jeremy Hunt said: “While the UK was the fastest growing economy in the G7 last year, as well as avoiding a recession, our economy is more resilient than many feared.

“However, we are not out of the woods yet, especially when it comes to inflation.

“If we stick to the plan to halve inflation this year, we can be confident of having the best prospects for growth anywhere in Europe”.

Output fell 0.5 per cent in December compared with the previous month, the ONS said, with contributions to the fall also coming from strikes including some early winter snow and the Royal Mail dispute. The report also points to the negative impact of the World Cup as another explanation for the drop in output due to the lack of Premier League football.

Darren Morgan, director of economic statistics at the ONS, said of the performance: “The economy contracted sharply in December meaning, overall, there was no growth in the economy in the last three months of 2022.

“Government services were affected by fewer operations and GP visits in December, partly due to the impact of the strike, as well as significantly lower school attendance.

“Meanwhile, the pause in Premier League football for the World Cup and the postal strike also caused a slowdown.

“However, this fall was partially offset by a strong month for lawyers, a rise in car sales and an increase in energy production by the cold snap. Overall, the economy grew by 4% through 2022”.

“Despite recent pressures on household incomes, restaurants, bars and travel agents had a strong year. Meanwhile, health and education are also beginning to recover from the impact of the pandemic”.

Economists have suggested that a recession is inevitable in the first part of this year, with the International Monterey Fund (IMF) predicting last month that the UK would be the worst performer in the developed world and the only one to experience negative growth with sanctions. – Hit Russia.

The Bank of England even predicted in November last year that the economy was already in recession.

Shadow Chancellor Rachel Reeves said the new figures showed the UK economy was stuck in the “slow lane”. He called for “urgent measures” to tackle the cost-of-living crisis after data from the Office for National Statistics showed the UK recorded zero growth between October and December.

He said: “Today’s figures show us how – despite Britain’s huge potential – our economy is stuck in a slump.

“We can be a leader in future industries that will help grow our economy.

“And we must bring in urgent measures to prevent further damage from the cost of living crisis, using a proper windfall tax on the oil and gas giants to stop the energy price cap increase in April so that more money is in people’s pockets.

“Built on the rock of economic stability, Labor will tackle the lifestyle crisis and grow our economy, through our Green Prosperity Plan, reforming business rates, and making the UK the best place to start and grow a business”.

Jonathan Moyes, head of investment research at the Wealth Club, said the ONS data “paints a very bearish picture for the state of the economy in Q4”. He said:

“The release will do little to sway the views of economic forecasters. It remains a bold call to signal a turning point in UK sentiment. However, a more optimistic consensus seems to be forming.

“The Bank of England upgraded its outlook for the economy last week, with energy prices falling sharply, China reopening and interest rate expectations falling significantly”.