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<\/a><\/p>\nBy Andy Bruce and William Schomberg<\/p>\n
LONDON (Reuters) – Britain’s economy stagnated in February as strikes by public workers hit output but a bounce in January was stronger than first thought, meaning a recession is a bit less likely to be brewing in early 2023, official data showed.<\/p>\n
Economic output was flat in month-on-month terms in February, against the consensus forecast for a 0.1% increase in a Reuters poll of economists.<\/p>\n
But the Office for National Statistics (ONS) revised up its estimate for January’s growth to 0.4% from 0.3% – meaning Britain is likely to avoid the first-quarter contraction that the Bank of England predicted last month.<\/p>\n
The bigger picture remains weak. While sidestepping recession for the time being, Britain’s economy has stagnated over the last year.<\/p>\n
International Monetary Fund projections published this week showed Britain bottom of the world’s major economies in terms of expected economic growth in 2023, with a 0.3% contraction pencilled in, equivalent to a 0.7% fall on a per capita basis.<\/p>\n
Suren Thiru, economics director at accountancy body ICAEW, said recession fears would linger as higher taxes and borrowing costs offset the fall in inflation and government support for energy bills.<\/p>\n
“These figures suggest that the economy has lost momentum as sky-high inflation and strike action continue to drag on key drivers of UK GDP, notably services and industrial production,” Thiru said.<\/p>\n
He said the BoE should end its run of interest rate hikes next month as raising rates would further weaken the country’s growth prospects.<\/p>\n
The ONS said the vast services sector contracted by 0.1% in February, hurt by strikes by teachers and other public sector workers, but was offset by a surge in the much smaller construction sector which rebounded from bad weather in January, the ONS said.<\/p>\n
The upward revision to January means the economy would need to have shrunk by 0.6% in March for the first quarter as a whole to show a contraction.<\/p>\n
Finance minister Jeremy Hunt said the data showed Britain’s economic performance had been stronger than thought.<\/p>\n
Thursday’s figures showed a 2.4% surge in construction output – which represents around 6% of the economy – was the sole driver of economic growth in February.<\/p>\n
ONS officials attributed the jump in construction output to a recovery in February from disruption caused by bad weather in January, especially in new work, and a surge in maintenance and repair work.<\/p>\n
\n(Reporting by Andy Bruce; Editing by William Schomberg and Christina Fincher)<\/p>\n
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