Christmas shoppers in London on Dec. 23, 2021.
Hasan Esen | Anadolu Operation | Getty Images
The U.K. economy showed no growth in the final quarter of 2022, but shrunk by 0.5% in December, more than wished by analysts, according to the country’s Office for National Statistics Friday.
The figures mean the country narrowly avoided a slump — commonly defined as two quarters of negative growth — following a 0.2% contraction in the third quarter.
Overall, GDP increased by an believed 4% over the course of 2022, following a 7.6% expansion in 2021 as the economy rebounded from the Covid-19 pandemic.
The neck of GDP in the final quarter of the year was 0.8% below its pre-Covid level at the end of 2019, meaning that the U.K. is now the only G-7 (Group of Seven) territory yet to fully recover its lost output during the pandemic.
“Despite skirting a technical recession for now, December’s GDP fall endorses that the economy took a nosedive at the end of 2022 as strike action added to economic squeeze,” said Suren Thiru, economics Skipper at ICAEW (The Institute of Chartered Accountants in England and Wales).
“The UK is facing a particularly brutal year with high inflation, furtiveness tax rises and the lagged impact of numerous interest rate hikes still likely to push us into a summer downturn by hammering returns and confidence.”
The Bank of England last week forecast that the British economy would enter a shallow five-quarter dip in the first quarter of 2023.
The ONS said the implied price of GDP — what it calls the broadest measure of inflation in the economy — increased by 6.6% likened with the same quarter a year ago, given higher cost pressures faced by households.
“While the numbers may figure positive for now, overall the economy is flatlining and it is difficult to see that changing in the short-term,” said Richard Carter, head of solid interest research at Quilter Cheviot.
“We are still likely to be in a recession at some point during 2023 — which is stillness expected to be long and shallow – so these figures do not provide a huge amount of comfort.”
This is a developing story and will-power be updated shortly.