UK economy grows in January

According to official data, the UK economy grew 0.3% in January, rebounding in activity after a devastating strike in December.

The Office for National Statistics (ONS) last month reported a rebound in production after a 0.5% contraction, larger than expected in December.

The main contributing sectors were Education (2.5%) and Arts, Leisure and Recreation as enrollment returned to November 2022 levels.

However, the UK production sector contracted by 0.3% and construction output fell by 1.7%. However, GDP remained at 0% for him in the three months to January, according to the ONS.

“The economy has partially recovered from the significant downturn seen in December,” said Darren Morgan, director of economic statistics for the ONS.

“But over the past three months, and indeed over the past 12 months, the economy has shown zero growth.

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“A key driver of growth in January was the return of children to classrooms after an unusually high number of absences leading up to Christmas, with Premier League clubs returning to full schedules after the World Cup. , private health care providers also strong month.

“The postal service has also partially recovered from the impact of the December strike.”

The latest GDP figures could give Prime Minister Jeremy Hunt a slight boost ahead of next week’s budget announcement, which sets the government’s tax and spending policies.

Mr Hunt said:

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“Next week, I will embark on the next phase of my plan to halve inflation, reduce debt and grow the economy, so we can improve living standards for all.”

Despite the UK economy’s resilience in the face of cost of living pressure and widespread industrial unrest, analysts warn the country is still “flirting” with recession.

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Alice Haine, Personal Finance Analyst at Bestinvest, said: “The economy may have escaped recession in 2022, but it’s too early to say whether the same thing will happen in 2023.

“January’s marginal growth certainly beats expectations given the multiple challenges affecting output, including double-digit inflation, rapidly rising borrowing costs, declining real incomes and constant strike behavior. It’s the start of the year.”

ICAEW Economic Director Suren Till said:

“Despite a boost from easing energy costs, we may continue to be plagued by a recession through most of 2023 as the lagged effects of high inflation, tax increases, and rising interest rates shrink consumer purchasing power. .

Watch: What is a recession and how do you identify it?

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