EconomyFeb 10 2023

UK avoids recession by ‘skin of its teeth’

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UK avoids recession by ‘skin of its teeth’
Travellers check the train departure board at Waterloo Station in London, Friday, Feb. 3, 2023. Strikes led to the UK economy stagnating in Q4 2022 (AP Photo/Frank Augstein)
BySally Hickey

The economy did not grow in the fourth quarter last year, narrowly avoiding a recession but underperforming the Bank of England’s expectations.

Gross domestic product did not change between October and December last year, the Office for National Statistics said today (February 10).

The UK has therefore avoided a technical recession, which is two quarters of declining economic output.

Quarterly GDP since 2019

However, the reading came in below the central bank’s expectation of 0.1 per cent growth, and the economy is 0.8 per cent smaller than its pre-Covid level in Q4 2019.

This is despite the Office for Budget Responsibility predicting the UK economy would be back at its pre-pandemic level ‘by the turn of the year’ in October last year.

The UK economy grew in October and November but shrank by 0.5 per cent in December, partly caused by strikes by transport and postal workers.

Chancellor of the exchequer, Jeremy Hunt said: “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.

Whether we are officially in recession will not make much difference to most peopleJeremy Batstone-Carr, Raymond James Investment Services

“However, we are not out the woods yet, particularly when it comes to inflation.”

Jeremy Batstone-Carr, European strategist at Raymond James Investment Services said: “Today’s figures confirm that the UK has escaped recession by the skin of its teeth in 2022.”

The downturn has “barely been kept at bay,” he added, saying it is likely to be shorter and shallower than previously thought. 

“However, whether we are officially in recession will not make much difference to most people – it will simply feel like a continuation of the present sluggishness and cost-of-living woes.”