The UK economy has stagnated in the last three months of 2022 – enough to avoid slipping into a recession for now – but faces a bleak outlook for 2023 as households continue to struggle with double-digit inflation.
Monthly gross domestic product data for December – a month marked by widespread rail strikes and bad weather – showed a 0.5% contraction, the Bureau for National Statistics said, larger than the forecast for a 0.3% decline.
“The economy contracted sharply in December, which means that, overall, there was no growth in the economy over the last three months of 2022,” said agency statistician Darren Morgan.
Output fell 0.2% in the three months to the end of September – when many businesses closed briefly to mark Queen Elizabeth’s funeral – and a second straight quarter of falling output would have met Europe’s usual definition of a recession.
However, it is likely that the break will only be temporary.
The Bank of England predicted last week that the UK would enter a shallow but long recession, starting in the first quarter of this year and lasting for five quarters.
The British standard of living has been hit by a rise in inflation, which reached a 41-year high of 11.1% in October, and businesses and households will also feel a growing impact from the rapid rise in interest rates by the central bank since December. from 2021.
Production in the fourth quarter was still 0.8% below its pre-pandemic level, in stark contrast to other major advanced economies that are now above their pre-pandemic size.
ING economist James Smith said he expects the British economy to contract by 0.3%-0.4% in the first quarter of this year, and by a smaller amount in the second quarter.
“Recession, or at least a technical recession, remains the base case. But this looks like it will be very mild by historical standards, helped of course by the collapse in wholesale gas prices,” he said.
Over 2022 as a whole, the British economy grew by 4.0% after growth of 7.6% in 2021, amid recovery from the historic blow of the Covid-19 pandemic.
Source: CNN Brasil
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