You are here: Home - Household Bills - News -

No growth for UK economy in February after strike action

Written by: Rebecca Goodman
Gross domestic product (GDP) held steady in February as a rise in construction output was offset by declines in sectors hit by strikes involving teachers and health workers.

The latest estimate issued by the Office for National Statistics (ONS) said a rise in construction was offset by declines in sectors that had been hit by walkouts by workers including teachers and NHS staff.

The lack of growth follows a surprise increase of 0.4% in real gross domestic product (GDP) in January. In the three months to February, GDP rose 0.1%. (GDP measures a country’s economic growth based on the value of goods and services produced during a specific time period.)

The ONS said the largest contributions to the fall in GDP came from education and public administration, and defence. Industrial action took place in both of these sectors in February.

Despite the flat results, Chancellor of the Exchequer Jeremy Hunt, remained optimistic. 

He 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.”

The ONS said monthly GDP is now estimated to be 0.3% above its February 2020 pre-coronavirus level. 

The construction sector grew by 2.4% in February, after a fall of 1.7% in January. There was a 0.4% rise in output by  consumer-facing services in February, and the largest contributor was retail trade. 

‘The economy is still expected to shrink this year’

Victoria Scholar, head of investment at Interactive Investor, said: “Although the UK looks set to avoid a technical recession and last year’s extremely pessimistic forecasts have been wound back, the economy is still expected to shrink this year as pressures from persistent inflation with the cost-of-living crisis, falling real wages and a high exposure to gas prices take their toll. Plus the recent turmoil in the banking sector is likely to add to the UK’s economic woes. 

“Despite this, the FTSE 100 has been extremely resilient, rallying over 3.5% year-to-date partly thanks to its leaning towards defensive stocks like healthcare and utilities. The FTSE 250 which is more closely correlated with the UK economy however is down so far in 2023 and has shed over 9% year-on-year.” 

The figures come as this week the UK was forecast to be one of the worst-performing advanced economies this year, according to a report from the International Monetary Fund (IMF).

It predicts the UK economy will shrink by 0.3% in 2023 and grow by 1% in 2024.  

But the IMF has also said this week that it expected inflation, still in double digits, to fall back towards pre-pandemic levels. 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Big flu jab price hikes this winter: Where’s cheapest if you can’t get a free vaccine?

Pharmacies, supermarkets and health retailers are starting to offer flu jabs ahead of the winter season, but t...

Is now the time to fix your energy deal?

Fixed energy tariffs all but disappeared during the energy crisis. But now they are back with an increasing nu...

Octopus steps in to buy Shell Energy – what customers need to know

The deal is expected to complete in the fourth quarter of 2023 and will take Octopus Energy’s retail supply ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

The best student bank accounts in 2023: Cash offers, tastecards and 0% overdrafts

A number of banks are luring in new student customers with cold hard cash this year – while others are compe...

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Money Tips of the Week