EconomyApr 13 2023

UK economy stagnant in February

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UK economy stagnant in February
Striking junior doctors, civil servants and teachers attend a rally at Trafalgar Square in London, UK, on Wednesday, March 15, 2023. The impact of industrial action in February led to no growth in the UK economy (Chris J. Ratcliffe/Bloomberg)

The UK economy did not grow in February after the rise in construction output was negated by strikes.

Gross domestic product was static in February, according to the Office for National Statistics.

The construction sector grew by 2.4 per cent in the month, however the services sector fell 0.1 per cent, mainly driven by industrial action by teachers and the civil service.

Production output continued to fall, dropping 0.2 per cent in February after falling 0.5 per cent in January.

“Unseasonably mild weather led to falls in the use of electricity and gas,” said Darren Morgan, director of economic statistics at the ONS.

GDP grew by 0.5 per cent in February compared with the same month last year, and the economy grew 0.1 per cent in the three months to the end of February this year.

Jeremy Hunt, chancellor of the exchequer, said: “The economic outlook is looking brighter than expected.”

Rob Clarry, investment strategist at wealth manager Evelyn Partners, said the data may give the Bank of England “pause for thought” at its next rates meeting.

The central bank raised interest rates to 4.25 per cent at its last meeting, after inflation unexpectedly rose to 10.4 per cent in February.

The next rate setting meeting is on May 11.

Monthly GDP is now 0.3 per cent above pre-Covid levels, however the International Monetary Fund expects the UK economy to shrink by 0.3 per cent this year, the worst among all other advanced economies.

Clarry said: “UK economic activity remains weak: from an investment standpoint, we remain wary about exposure to the domestic economy given subdued growth and the delayed impact of higher interest rates.”

sally.hickey@ft.com