Sunday, March 26, 2023

UK Economy Recovers After Swerving Recession

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British rejoice as Office for National Statistics (ONS) revealed on Friday that the country’s economy recovered in January after it narrowly evaded recession in the fourth quarter of last year.

The ONS made known in a statement that the Gross domestic product had grown 0.3 percent as the services sector’s poor performance has been offset by construction and manufacturing.

GDP nosedived 0.5 percent in December owing to strikes by workers who protested about being underpaid despite the runaway inflation hitting the nation hard.

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“The economy partially bounced back from the large fall seen in December,” said ONS director of economic statistics Darren Morgan.

“The main drivers of January’s growth were the return of children to classrooms, following unusually high absences in the run-up to Christmas, the Premier League (football) clubs returned to a full schedule after the end of the World Cup and private health providers also had a strong month.

“Postal services also partially recovered from the effects of December’s strikes.”

Britain avoided recession last year but is predicted to contract throughout this year according to the Bank of England.

The report said that the output has been persistent by decades-high UK inflation, despite a recent easing, and hit also by rising BoE interest rates.

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The economy had registered zero growth in the final three months of last year, after shrinking 0.3 percent in the prior three months.

That avoided a technical recession, which is defined as two straight quarters of economic contraction.

The ONS warned however on Friday that the economy registered flat growth in the three months to January.

And GDP was also flat in January compared with the same month a year earlier.

“This tallies with the idea that the UK economy is going to shrink overall this year, even if a technical recession is avoided,” said Hargreaves Lansdown analyst Sophie Lund-Yates.

“The takeaway for businesses is unfortunately that things are going to remain very challenging, with stagnation a likely scenario for some time.”

Monthly GDP was meanwhile estimated to be 0.2 percent below its pre-pandemic level.

Friday’s data was meanwhile published one week before British finance minister Jeremy Hunt’s budget.

“In the face of severe global challenges, the UK economy has proved more resilient than many expected, but there is a long way to go,” Hunt said in response to Friday’s data.

“Next week, I will set out the next stage of our plan to halve inflation, reduce debt and grow the economy – so we can improve living standards for everyone.”

Global inflation last year reached the highest levels in decades as the invasion of Ukraine by Russia sent energy and food prices higher.

The UK Consumer Prices Index (CPI) peaked at an annual rate of 11.1 percent in October before falling to 10.1 percent last month.
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