Fears are mounting of a recession in the UK after the beginning of 2022 saw Britain's economy grow at the slowest pace for a year. Official figures show that the economy shrunk in March amid concerns over the cost of living crisis.
Numbers released by the Office for National Statistics (ONS) said that GDP increased by 0.8 per cent from January to March. This was down from the previous three months' growth of 1.3 per cent, and was also the weakest since the first quarter of last year.
GDP fell by 0.1 per cent on a monthly basis in March following a stall in growth in February and a 0.7 percent rise in January. The expansion does mean that GDP is currently 0.7 per cent above the levels which were seen before the pandemic.
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Nonetheless, these figures are likely to merely be the calm before the storm. The deepening cost of living crisis has many now warning of a recession.
Darren Morgan, director of economic statistics at the Office for National Statistics (ONS), said: “The UK economy grew for the fourth consecutive quarter and is now clearly above pre-pandemic levels, although growth in the latest three months was the lowest for a year.
“This was driven by growth in a number of service sectors as the economy continued to recover from Covid-19 effects, including hospitality, transport, employment agencies and travel agencies. There was also strong growth in IT.”
He added: “Our latest monthly estimates show GDP (gross domestic product) fell a little in March, with drops in both services and in production.
“Construction, though, saw a strong month, thanks partly to repair work after the February storms.”
The lack of a price cap on energy prices has caused gas and electricity to skyrocket for many households across the UK while other countries such as France have introduced an energy price cap. Some have even seen their bills more than double as the crisis bites.
Food prices have also risen, in part due to uncertainty over imports and labour shortages in the wake of the UK's exit from the EU. Rising overheads could also have a knock on effect on prices as retailers try to cover increasing costs.
Another factor has been the cost of fuel at the pump, with Russia's invasion of Ukraine causing a spike in oil and gas prices. Despite the UK only importing a very small proportion of its fuel from Russia compared to countries like Germany, the uncertainty in the European market has had a knock on effect on UK prices.
And whilst figures may have shown that there has been economic growth, this is not necessarily indicative that the UK economy is recovering. The slump during lockdown meant there was very little economic activity, and what appears to be an increase in growth could simply be indicative of the UK returning to business as usual.
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