The UK avoided a recession in the second half of 2022 but new figures showed the economy essentially flatlined between October and December.
Unrounded figures from the Office for National Statistics (ONS) suggested 0.01% growth in the UK economy over that time, meaning the country did not see two consecutive quarters of declining gross domestic product (GDP) - the technical definition of a recession.
Chancellor Jeremy Hunt said the figures showed the UK economy was more resilient than many feared but admitted the country was “not out the woods”. Opposition politicians have criticised the Government’s handling of the economy while business groups have warned that tough times are ahead.
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Mr 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.”
Labour’s shadow chancellor Rachel Reeves called for “urgent measures” to be brought forward to alleviate the cost-of-living crisis after Office for National Statistics data showed the UK recorded zero growth between October and December.
She 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.”
The UK economy grew by 4% in 2022 as a whole, though it fell by 0.5% in December. The ONS said that the December economy was hit by strikes and the lack of Premier League football, though it had been a strong month for lawyers, car sales and energy production.
David Bharier, head of research at the British Chambers of Commerce, said: “Today’s GDP estimates, while indicating the economy technically avoided a recession, show some worrying developments. Production output fell by 0.2% in Q4 2022, eight of the 14 service sectors saw contractions, and monthly GDP fell by 0.5% in December.
“Small businesses have seen three years of economic shocks, including lockdowns, global supply chain crises, Brexit, and soaring energy costs. Our research has shown that most small firms have seen no improvements to sales, exports, or investment. Retailers and hospitality firms are among the worst affected by this current anaemic economy.”
Federation of Small Businesses policy chair Tina McKenzie said: “While it is positive that the UK has technically avoided a recession in the second half of last year, the news will come as cold comfort to many thousands of small businesses. In particular, the 0.5% fall in GDP in December is a red flag showing the economy stalled at the end of 2022, just when small firms were hoping for a traditional festive boost."
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