UNITED KINGDOM: British economic growth slowed in February due to public sector worker strikes, but a stronger-than-anticipated rebound in January suggests a recession is less likely to be brewing in the first quarter of 2023.
Economic output was flat month-over-month in February, but the ONS raised its forecast for January’s growth from 0.3% to 0.4%, suggesting Britain is likely to avoid the first-quarter drop that the Bank of England predicted last month.
Britain’s economy has stalled during the past 12 months, with forecasts from the International Monetary Fund predicting a 0.3% contraction and a 0.7% decline on a per capita basis in 2023.
This will be compensated by rising taxes and borrowing costs, according to Suren Thiru, director of economics at the accounting organisation ICAEW. The decline in inflation and government assistance for energy costs will be offset by rising taxes and borrowing costs.
Thiru argued that the UK economy has lost pace due to high prices and strike activity. He advised the BoE to stop raising interest rates as it would further harm the nation’s prospects for economic growth. The smaller construction industry gained in February, which made up for the services sector’s 0.1% decline as a result of poor weather in January.
The economy would have to have contracted by 0.6% in March for the first quarter as a whole to demonstrate a contraction due to the higher revision to January. The figures, according to finance minister Jeremy Hunt, showed that Britain’s economic performance had been better than anticipated.
The data released on Thursday showed that the only factor driving economic growth in February was a 2.4% increase in construction output, which accounts for around 6% of the economy.
The increase in construction output was attributed by ONS officials to a comeback in February following the interruption caused by adverse weather in January, particularly in new work, and a rise in maintenance and repair work.
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