The United Kingdom recorded zero growth in the fourth quarter after a contraction of 0.3% in the third, allowing it to avoid in 2022 the recession which was feared even if forecasters anticipate it for this year, while the country is going through a deep cost of living crisis.
For the month of December alone, the gross domestic product (GDP) also fell sharply by 0.5% after growth of 0.1% in November, according to the first estimates of the National Statistics Office (ONS) published Friday.
The United Kingdom is thus doing less well than France in particular (+0.1% in the fourth quarter).
The ONS stresses that a large part of the decline in activity in December is due to the strike movements which are shaking the country in many sectors including health, transport, post, education, to demand not only wage increases but also better working conditions.
These claims are favored by an unemployment rate which remains extremely low in the United Kingdom at 3.7% at the end of November.
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Over the whole of 2022, British GDP increased by 4.1% after 7.4% the previous year, adds the ONS.
Britain's economy had fallen in 2020, at the height of the Covid-19 pandemic, lower than other G7 economies.
The UK remains the only country in this group that has not returned to its pre-pandemic GDP level.
Chancellor of the Exchequer Jeremy Hunt praised the UK for having "
avoided a recession
" last year, which he said was a sign of a "
more resilient economy than many feared
".
“
However, we are not out of the woods, particularly with regard to inflation.
If we stick to our plan to halve inflation this year, we can count on some of the best growth prospects in Europe
“, assures the British Minister of Finance, in a press release.
According to the IMF, the United Kingdom will however be the only major economy to suffer a recession in 2023, recording a worse performance than in the euro zone or the United States, but also than in Russia, yet targeted by many international sanctions.
Back on track
UK inflation slowed to 10.5% in December from a peak of over 11% in October, but remains buoyed by high energy and food prices, tensions in the labor market labor and supply chain difficulties which have been aggravated by Brexit.
The UK has "
avoided a recession by a hair's breadth (in 2022).
However, we expect inflation and high interest rates to generate one this year
,” comments Paul Dales, Economist at Pantheon Macro.
"
While you can't put the label 'recession' on the economy, it's clear the UK is struggling and everyone is feeling the country's economic malaise
," said Laura Suter, analyst at AJ Bell.
She also notes that “
Christmas was dark, and did not bring the usual economic boost
” which, according to her, presages a “
depressed
” month of January.
Economists at the Bank of England (BoE) expect UK GDP to fall by 0.5% in 2023 and estimate that a five-quarter recession started in January.
On Thursday, the Governor of the Bank of England (BoE) admitted that inflation has started to decline in the United Kingdom, but that the monetary institute needs more indications that this fall will continue before stopping interest rate hikes.
She has so far chained ten.
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These monetary tightenings combined with the increases in borrowing rates generated by the tumult of the markets in the wake of a massive and unfunded budget of the previous government contribute to a weighed down activity in the United Kingdom.
The government of Tory Rishi Sunak, whose party is well behind the Labor opposition in the polls, is under pressure to raise the bar ahead of a general election expected in late 2024.
