UK Economy Sees Growth in Q4 2022
According to a revised look at the UK’s economy over the last three months of 2022, it was revealed that the economy experienced more growth than was previously believed. Earlier reports had suggested that the economy had not experienced growth in the final quarter of 2022. However, updated data from the Office for National Statistics (ONS) indicates a 0.1% growth during that period. This new information confirms that the UK economy managed to dodge a recession in late 2022.
The ONS reported that the telecommunications, construction, and manufacturing sectors all performed better than initially estimated. The government's energy bill assistance program also positively impacted household finances. The primary driving force of the UK economy, the services sector, saw significant growth, particularly among travel agencies. Growth in manufacturing was fueled by the pharmaceutical industry, while construction saw a more substantial increase than previously believed.
The ONS revised its economic performance estimate for the July-to-September quarter as well. The current estimate shows a 0.1% decrease in GDP, an improvement over the prior 0.2% drop estimate.
Chancellor Jeremy Hunt acknowledged the data's demonstration of "underlying resilience in the UK economy." Nonetheless, he recognized the ongoing financial strain faced by families across the nation.
A recession is typically characterized by two consecutive quarters of economic contraction. The growth in the final quarter of 2022 allowed the UK to sidestep a recession. The Bank of England recently projected minimal economic growth in the upcoming months. Despite this, Bank governor Andrew Bailey expressed increased optimism for the economy and dismissed concerns of an imminent recession.
Bailey's remarks followed an interest rate hike from 4% to 4.25%. To curb the rapid pace of price increases, interest rates have been raised multiple times. Inflation, the rate at which prices rise, is nearly at its highest point in four decades, reaching 10.4% in February.
Ruth Gregory of Capital Economics said the updated ONS data showed that the impact of high inflation on the economy was slightly less than expected. However, she warned that the full effect of increased interest rates is yet to be experienced. Gregory maintains her prediction of an economic recession in the UK this year.
In other news, Nationwide mortgage lender reported that house prices in March declined at the fastest yearly rate since 2009.