Yahoo Finance UK economy grinds to a halt in February amid strikes
The UK economy flatlined in February, with no growth in GDP, amid a wave of strikes across the public sector.
The economy was flat during the second month of the year, the Office for National Statistics said, as striking teachers, rail workers and civil servants brought the British economy to a grinding halt.
The ONS reports that the services sector output fell by 0.1%, while production fell 0.2% and construction grew 2.4%.
This follows growth of 0.4% in January, which has been revised up from growth of 0.3% in the previous publication.
Today’s @ONS figure suggests that monthly #GDP remained flat in February following growth of 0.4 per cent in January, as a boost in construction was offset by contractions in the services and production sectors. Encouragingly, GDP grew by 0.1 per cent in
1/3— National Institute of Economic and Social Research (@NIESRorg) April 13, 2023
The largest contributor to negative growth in the services industry was education, which fell 1.7% in a month where teacher strikes took place.
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Another strikes hit sector, public administration, was the second largest contributor to negative growth in the services industry.
Today’s @ONS figure suggests that monthly #GDP remained flat in February following growth of 0.4 per cent in January, as a boost in construction was offset by contractions in the services and production sectors. Encouragingly, GDP grew by 0.1 per cent in
1/3— National Institute of Economic and Social Research (@NIESRorg) April 13, 2023
Despite the flat performance in February, the chancellor said the country's economic outlook was "brighter than expected".
Jeremy Hunt said: “The economic outlook is looking brighter than expected – GDP grew in the three months to February and we are set to avoid recession thanks to the steps we have taken through a massive package of cost-of-living support for families and radical reforms to boost the jobs market and business investment.”
A recession is generally defined in the UK as two quarters of declining GDP in a row.
GDP would need to sink below 0.6% in March for the economy to have shown negative growth in the latest quarter, the ONS said.
Jonathan Moyes, head of investment research at the Wealth Club, said: “The UK’s dominant services sector took a step back over the month as the teachers strikes took their toll on the economy. Flat GDP growth was lower than the 0.1pc expected. Although it is pleasing to see January data revised higher. The release will do little to change the gloomy outlook for the economy.”
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The IMF this week forecast that the UK economy would shrink 0.3% this year, the worst performance of any G7 economy.
Tom Stevenson, investment director for Personal Investing at Fidelity International, said: ‘The latest data, and the improving trend elsewhere (such as better than forecast inflation numbers in America) confirm the International Monetary Fund’s gloomy assessment this week that put Britain at the bottom of the league table of leading economies. Only Germany is also expected by the IMF to contract this year.”
Watch: UK economy flatlines with no growth in February as strikes hit productivity
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