'Not out of the woods yet': Britain avoids plunging into recession as it records zero growth

10 February 2023, 07:07 | Updated: 10 February 2023, 08:48

Jeremy Hunt warned the UK was not out of the woods yet
Jeremy Hunt warned the UK was not out of the woods yet. Picture: Alamy

By Will Taylor

Britain narrowly avoided a recession in the second half of last year.

Output between October and December was 0%, the Office for National Statistics (ONS) said.

Had that figure been negative, then Britain would have been a recession because it shrank in the three months to September.

Price pressures driven largely by energy costs was to blame for the stalling economic activity.

In the UK, a recession is generally defined as two quarters in a row when gross domestic product falls. GDP fell by 0.2% in the third quarter of 2022 - between July and September.

Chancellor Jeremy Hunt said: "The fact the UK was the fastest growing economy in the G7 last year, as well as avoiding a recession, shows our economy is more resilient than many feared.

"However, we are not out the woods yet, particularly when it comes to inflation.

"If we stick to our plan to halve inflation this year, we can be confident of having amongst the best prospects for growth of anywhere in Europe."

Read more: 'Move out of the way, Rishi Sunak': Labour holds West Lancashire with big majority in byelection

Jeremy Hunt warned there is more work to do on inflation
Jeremy Hunt warned there is more work to do on inflation. Picture: Alamy

The Treasury pointed to Germany, Italy and France also seeing weak growth in the final quarter of 2022, and referenced the Bank of England's forecast of a recession being shallower than previously fought.

The economy grew by 4% in 2022, but fell by 0.5% in December.

Darren Morgan, director of economic statistics at the ONS, 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 4%. 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."

Rachel Reeves MP said: "Today's figures show us how - despite Britain's great potential - our economy is stuck in the slow lane.

"We can be a leader in the industries of the future that will help grow our economy.

"And we must bring in urgent measures to prevent yet more harm from the cost of living crisis, using a proper windfall tax on oil and gas giants to stop the energy price cap going up in April so that people have more money in their pockets.

"Built on the rock of economic stability, Labour will tackle the cost of living crisis and get our economy growing, with our Green Prosperity Plan, reform to business rates, and by making the UK the best place to start and grow a business."

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