The United Kingdom reported zero growth in the fourth quarter after a contraction of 0.3% in the third, according to early estimates, allowing it to avoid recession in 2022, even though forecasters forecast it for this year while the country enters a deep recession. is passing through. Cost of living crisis.
Gross domestic product (GDP) also declined sharply by 0.5% in the month of December alone, after a 0.1% increase in November, according to preliminary data from the Office for National Statistics (ONS) published on Friday.
The ONS stressed that a large part of the decline in activity in December is due to strike movements that are rocking the country to demand not only wage increases but better working conditions in many sectors, including health, transport, postal, education .
These claims are supported by an unemployment rate that is extremely low in the United Kingdom at 3.7% at the end of November.
The ONS adds, in the whole of 2022, British GDP is expected to grow by 4.1% after 7.4% last year.
The UK economy shrank in 2020, at the peak of the COVID-19 pandemic, compared to other G7 economies. The UK is the only country in this group that has not returned to its pre-pandemic GDP level.
Chancellor of the Exchequer Jeremy Hunter said: “The fact that the UK recorded the fastest growth in the G7 last year, while avoiding recession, shows that our economy is much more resilient than feared.”
“However, we are not out of the woods, particularly on inflation. If we stick to our plan to halve inflation this year, we can count on some of the best growth prospects in Europe,” British Finance The minister gave the assurance in a statement. Press release.
According to the IMF, however, the United Kingdom will be the only major economy to fall into recession in 2023, recording a worse performance than the euro area or the United States, but also compared to Russia, still targeted by several international sanctions. Is.
– back on track –
UK inflation slowed to 10.5% in December from a peak of more than 11% in October, but remains buoyed by higher energy and food prices, tight labor markets and supply chain difficulties exacerbated by Brexit.
The United Kingdom has “a hair’s breadth avoided recession” in 2022, commented economist Paul Dales of Pantheon Macro (the generally accepted definition is at least two consecutive quarters of contraction). “However, we expect inflation and higher interest rates to generate one this year,” he added.
AJ Bell analyst Laura Sutter says, “While you can’t label the economy a ‘recession’, it’s clear Britain is struggling and everyone is feeling the country’s economic plight.”
She also notes that “Christmas was dark and did not bring the usual economic boost” which according to her, reflects a “gloomy” month of January, especially because of the intensification of social movements.
Bank of England (BOE) economists expect UK GDP to fall by 0.5% in 2023 and forecast a five-quarter recession starting in January.
On Thursday, the governor of the Bank of England (BoE) acknowledged that inflation has begun to decline in the United Kingdom, but the monetary institution needs more signals that this decline will continue before halting interest rate hikes. She has chained ten so far.
These monetary tightenings, combined with increases in lending rates resulting from market turmoil in the wake of the previous government’s massive and unfunded budget, contributed to weighted activity in the United Kingdom.
The government of Tory sage Sunak, whose party trails the Labor opposition in polls, is under pressure to raise the bar ahead of a general election due in late 2024.
Meanwhile, he is scheduled to announce a “Global Investment Summit” on Friday in front of some 200 businessmen and women this fall to spur growth.
