The UK narrowly avoided falling into recession last year as latest statistics on Friday revealed a flat output in the last few months of 2022, even as the government warned the economy was not out of the woods for 2023 and halving inflation remains the target.
The Office for National Statistics (ONS) reported that output between October and December 2022 was 0 per cent, narrowly avoiding the definition of a recession of two consecutive quarters of negative figures after a poor July to September quarter. The narrow miss, which is subject to revision by the ONS when more data becomes available, reflects an economy that seems to be stagnating after an overall growth for 2022 of 4 per cent.
"The economy contracted sharply in December meaning, overall, there was no growth in the economy over the last three months of 2022,” Darren Morgan, ONS Director of Economic Statistics.
“In December public services were hit by fewer operations and GP (General Practitioner) visits, partly due to the impact of strikes, as well as notably lower school attendance. Meanwhile, the break in Premier League football for the World Cup and postal strikes also caused a slowdown. However, these falls were partially offset by a strong month for lawyers, growth in car sales and the cold snap increasing energy generation. Across 2022 as a whole, the economy grew 4 per cent,” he said.
"Despite recent squeezes in household incomes, restaurants, bars and travel agents had a strong year. Meanwhile, health and education also began to recover from the effects of the pandemic," he added.
UK Chancellor Jeremy Hunt, who is under pressure to use his upcoming Spring budget to boost growth, responded to the figures with a measured approach.
“The fact the UK was the fastest growing economy in the G7 last year, as well as avoiding a recession, shows our economy is more resilient than many feared,” he said.
“However, we are not out the woods yet, particularly when it comes to inflation. 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,” he said.
While economists remain divided on whether the UK will enter or avoid an economic downturn this year, the Bank of England expects the country to enter recession but much shorter and shallower than previously feared.
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