Closing summary
Time for a recap, after a day in which the UK very narrowly avoided falling into a technical recession.
Today’s GDP report has shown that the UK economy stagnated in the final quarter of 2022, narrowly avoiding a recession despite output shrinking by more than expected in December.
The economy escaped a recession in 2022 by “the skin of its teeth (£77m to be precise)“, says Paul Dales of Capital Economics.
The chancellor, Jeremy Hunt, has warned that the UK is not ‘out of the woods’, but also claimed the economy was showing more resilience than expected.
Hunt pointed out that the UK grew faster than other G7 countries during 2022 – but it is the only one yet to have recovered all the output lost in the pandemic.
Shadow chancellor Rachel Reeves said the latest GDP figures should be a “wake-up call” for the Government.
In December alone, GDP shrank by 0.5%.
Darren Morgan, director of economic statistics at the Office for National Statistics (ONS), says:
“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.
Several economists predicted the UK economy could contract in the current quarter.
Here’s the full story, and analysis of how 2023 will be tough:
Plus in other news…
Labour’s shadow chancallor, Rachel Reeves, has ured the government to wake up to the problems in the economy.
Speaking to broadcasters during a visit in Bolton, Reeves said:
“I hope today’s numbers are a wake-up call to the Government because the economy now is just flatlining along the bottom.
“We’re the only major G7 economy that is still smaller than it was before the pandemic – and zero growth is not a success.
“The Government now urgently need to put in place a real plan for economic growth, as well as tackling the cost-of-living crisis that is affecting so many families and pensioners right now.”
