According to official data issued by the Office for National Statistics, the UK economy narrowly avoided going into a recession at the end of 2022.
In the latter three months of the year, the economy remained flat, with growth of 0.1% in November and 0.55% in October.
The economy did see a downturn in December, though—it shrank by 0.5%.
Following the 0.3% contraction in the third quarter, the fourth quarter’s negative growth would have signalled a recession if it had persisted.
Technically, two consecutive quarters of negative growth constitute a recession.
Economists did not have high hopes for the economy to perform well in the run-up to the holiday season, despite the difficulties brought on by the cost of living issue, which has reduced household purchasing power, and the troubles encountered by many small enterprises.
The Gross Domestic Product (GDP) of the nation was projected by Bank of England officials to increase by just 0.1% in the final three months of 2022.
Darren Morgan, director of economic statistics at the Office for National Statistics, said:
“The economy contracted sharply in December meaning, overall, there was no growth in the economy over the last three months of 2022.”
“In December public services were hit by fewer operations and GP visits, partly due to the impact of strikes, as well as notably lower school attendance. Meanwhile, the break in Premier League football for the World Cup and postal strikes also caused a slowdown.”
“However, these falls were partially offset by a strong month for lawyers, growth in car sales and the cold snap increasing energy generation. ”
“Across 2022 as a whole, the economy grew four percent. Despite recent squeezes in household incomes, restaurants, bars and travel agents had a strong year. Meanwhile, health and education also began to recover from the effects of the pandemic.
The health of a nation’s population is significantly influenced by its economy. One of the most crucial measures of a nation’s economic development is its Gross Domestic Product (GDP).
The UK economy has seen a variety of difficulties recently, especially in the wake of the Brexit vote.
As a result, there is now more uncertainty, which has an effect on trade, investment, and overall economic growth.
The COVID-19 pandemic and the subsequent cost-of-living problem have only made matters worse and caused a substantial downturn in the economy of the nation.
In response to the results released today, TUC General Secretary Paul Nowak said:
“Our flatlining economy is a problem made in Downing Street. By holding down pay, the Conservative government is holding back economic growth. It forces families to cut their spending. And it means that businesses have fewer customers.”
“The Chancellor and Prime Minister must get us out of this doom loop. They must put pay rises at the heart of next month’s budget. It’s the fuel in the tank that our economy needs to get moving again.”
The TUC’s budget submission called on the government to boost pay, deliver plans for strong public services and fair taxation, and protect families from the cost of living emergency. Specific recommendations include:
- Fund decent pay rises so that all public service workers get a real-terms pay rise
- Get the UK on a path to a £15 minimum wage as soon as possible
- Ensure those with the broadest shoulders pay their fair share in tax – including a higher windfall tax on oil and gas giants like Shell and BP
- Cancel the imminent hike in energy bills by keeping the Energy Price Guarantee no higher than £2,500