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The UK economy shrunk by 0.1% in March as consumers started to feel the bite of rising energy prices and the cost of living.
The latest figures also come after a period of no growth in February. During the period, services fell by 0.2% on the month and was the main contributor to March’s fall in GDP, reflecting a large decrease (15.1%) in the wholesale and retail trade and repair of motor vehicles and motorcycles industry.
Production also fell on the month by 0.2%; these falls were partially offset by construction, which grew by 1.7%.
Output in consumer-facing services fell by 1.8% in March 2022, following a 0.5% (revised down from 0.7%) growth in February 2022; non-consumer facing services grew by 0.2% on the month following a 0.1% fall in February (revised down from 0.0%).
Despite this, GDP grew by 0.8% in the three months to March 2022. Services was the main contributor in the three months to March, contributing 0.4 percentage points, while production and construction contributed 0.2 percentage points each.
Monthly GDP now sits 1.2% above its pre-coronavirus (COVID-19) pandemic level (February 2020).
Services is now 1.5% above its pre-coronavirus level, while construction is 3.7% above and production is 1.6% below; within services, consumer-facing services were 6.8% below their pre-coronavirus levels in March 2022, while all other services were 3.6% above.
Rain Newton-Smith, CBI chief economist, said: “The economy barely kept its head above the water during a volatile start to the year, but times look set to get that bit tougher.
“Cost pressures and rising prices have tightened their grip, with both businesses and households feeling the pinch. The end result is a weaker economic outlook.”
She added: “It’s clear that the most vulnerable households and energy-intensive businesses may need further support, so the government should keep this under review.
“But the only way to build a resilient economy, one that can withstand price shocks, is a relentless focus on growing productivity and potential output. Business is the solution to both, so should be adequately supported to invest and grow.”
