UK Economy Flatlines in February After Recovering to Pre-Pandemic Levels

There has been no monthly growth in the UK’s economy in February, the Office for National Statistics (ONS) estimated on Thursday. Teacher and civil service strikes may have acted as one of the biggest drags on GDP, with thousands of workers walking out during the month. But revised GDP figures for January showed that the economy has risen above levels seen before the COVID-19 pandemic for the first time. Chancellor of the Exchequer Jeremy Hunt said the economic outlook is “looking brighter than expected” thanks to government policies, while shadow chancellor Rachel Reeves said the UK is lagging behind other economies. It comes as the ONS said the UK’s consumer prices index inflation rate surged to 10.4 percent in the same month, unexpectedly jumping higher despite efforts from the Bank of England to pull it back to its 2 percent target. According to ONS estimates, real GDP in February grew by 0.5 percent compared to the same month last year, but remained the same compared to January this year. ONS Director of Economic Statistics Darren Morgan said while there was no growth overall, “construction grew strongly after a poor January” and there was also “a boost from retailing, with many shops having a buoyant month.” The construction sector saw a rebound in February, growing by 2.4 percent after falling by 1.7 percent in the previous month. The ONS said many companies noted that the mild weather had allowed them to get more work done. But warm weather also reduced demand for energy, leading to falls in gas and electricity production and distribution. The growth was also offset by the 0.1 percent decline in the services sector. The education and public administration sectors, both of which saw industrial action, were the biggest contributors to the fall. The ONS said anecdotal evidence from surveys suggested industrial action in February, including strikes by nurses, ambulance workers, teachers, and train drivers had a “notable impact” on the health sector, the civil service, the education sector, and the rail network, and contributed to businesses’ operating capacity. Mary Bousted (C), joint General Secretary of the National Education Union, joins members at a rally in central Manchester, as teachers in the north of England begin the first of three days of nationwide strike action, on Feb. 28, 2023. (Peter Byrne/PA Media) When looking at quarterly figures, the UK’s GDP grew by 0.1 percent in the three months to February 2023. The estimated monthly GDP growth in January was revised from 0.3 percent to 0.4 percent. It’s now estimated to be 0.3 percent above the pre-COVID-19 levels in February 2020, the ONS said. Commenting on the figures, Hunt said, “The economic outlook is looking brighter than expected.” “GDP grew in the three months to February and we are set to avoid recession thanks to the steps we have taken through a massive package of cost-of-living support for families and radical reforms to boost the jobs market and business investment,” he said. Paul Dales, chief UK economist at research group Capital Economics, told the Financial Times that the economy is “proving resilient to the twin drags of high inflation and high interest rates.” But Labour’s Reeves said that growth is “on the floor.” “Despite our enormous promise and potential as a country, Britain is still lagging behind on the global stage with growth on the floor,” she said. “The reality of growth inching along is families worse off, high streets in decline, and a weaker economy that leaves us vulnerable to shocks,” she added. The British Chambers of Commerce (BCC), which represents thousands of businesses in different sectors, added that growth remains “stubbornly low” despite the UK continuing to technically avoid a recession. David Bharier, the BCC’s head of research, said it’s “clear” that the UK is “stuck in a prolonged period of almost no growth.” Bharier said the BCC’s latest research shows a recovery of optimism among small and medium size businesses, but it’s “yet to translate into an improvement to business conditions in general.” He said the chamber expects annual GDP to contra contract by 0.3 percent this year, and called on the government to tackle high energy prices, labour shortages, and post-Brexit export barriers. PA Media contributed to this report.

UK Economy Flatlines in February After Recovering to Pre-Pandemic Levels

There has been no monthly growth in the UK’s economy in February, the Office for National Statistics (ONS) estimated on Thursday.

Teacher and civil service strikes may have acted as one of the biggest drags on GDP, with thousands of workers walking out during the month.

But revised GDP figures for January showed that the economy has risen above levels seen before the COVID-19 pandemic for the first time.

Chancellor of the Exchequer Jeremy Hunt said the economic outlook is “looking brighter than expected” thanks to government policies, while shadow chancellor Rachel Reeves said the UK is lagging behind other economies.

It comes as the ONS said the UK’s consumer prices index inflation rate surged to 10.4 percent in the same month, unexpectedly jumping higher despite efforts from the Bank of England to pull it back to its 2 percent target.

According to ONS estimates, real GDP in February grew by 0.5 percent compared to the same month last year, but remained the same compared to January this year.

ONS Director of Economic Statistics Darren Morgan said while there was no growth overall, “construction grew strongly after a poor January” and there was also “a boost from retailing, with many shops having a buoyant month.”

The construction sector saw a rebound in February, growing by 2.4 percent after falling by 1.7 percent in the previous month. The ONS said many companies noted that the mild weather had allowed them to get more work done.

But warm weather also reduced demand for energy, leading to falls in gas and electricity production and distribution.

The growth was also offset by the 0.1 percent decline in the services sector. The education and public administration sectors, both of which saw industrial action, were the biggest contributors to the fall.

The ONS said anecdotal evidence from surveys suggested industrial action in February, including strikes by nurses, ambulance workers, teachers, and train drivers had a “notable impact” on the health sector, the civil service, the education sector, and the rail network, and contributed to businesses’ operating capacity.

Epoch Times Photo
Mary Bousted (C), joint General Secretary of the National Education Union, joins members at a rally in central Manchester, as teachers in the north of England begin the first of three days of nationwide strike action, on Feb. 28, 2023. (Peter Byrne/PA Media)

When looking at quarterly figures, the UK’s GDP grew by 0.1 percent in the three months to February 2023.

The estimated monthly GDP growth in January was revised from 0.3 percent to 0.4 percent. It’s now estimated to be 0.3 percent above the pre-COVID-19 levels in February 2020, the ONS said.

Commenting on the figures, Hunt said, “The economic outlook is looking brighter than expected.”

“GDP grew in the three months to February and we are set to avoid recession thanks to the steps we have taken through a massive package of cost-of-living support for families and radical reforms to boost the jobs market and business investment,” he said.

Paul Dales, chief UK economist at research group Capital Economics, told the Financial Times that the economy is “proving resilient to the twin drags of high inflation and high interest rates.”

But Labour’s Reeves said that growth is “on the floor.”

“Despite our enormous promise and potential as a country, Britain is still lagging behind on the global stage with growth on the floor,” she said.

“The reality of growth inching along is families worse off, high streets in decline, and a weaker economy that leaves us vulnerable to shocks,” she added.

The British Chambers of Commerce (BCC), which represents thousands of businesses in different sectors, added that growth remains “stubbornly low” despite the UK continuing to technically avoid a recession.

David Bharier, the BCC’s head of research, said it’s “clear” that the UK is “stuck in a prolonged period of almost no growth.”

Bharier said the BCC’s latest research shows a recovery of optimism among small and medium size businesses, but it’s “yet to translate into an improvement to business conditions in general.”

He said the chamber expects annual GDP to contra contract by 0.3 percent this year, and called on the government to tackle high energy prices, labour shortages, and post-Brexit export barriers.