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The UK economy narrowly avoided recession as the latest figures from the Office for National Statistics (ONS) shows there was no growth in the fourth quarter from Oct to Dec 2022.
It comes as monthly estimates show that GDP fell by 0.5% in December 2022, following an unrevised growth of 0.1% in November 2022.
In output terms, the services sector slowed to flat output on the quarter driven by falls in the education, and transport and storage sub-sectors.
Within private consumption, there was a modest increase in real household expenditure of 0.1% in Quarter 4 2022, following a 0.4% contraction in the previous quarter, as real household incomes have been squeezed by higher inflation over the second half of 2022.
There were also continued declines in household goods and services, food and non-alcoholic drink, and recreation and culture. In current price terms, household expenditure rose by 1.3% in the quarter, as recent inflationary pressures increased the nominal value of this spending.
Elsewhere, growth of 0.3% in construction was offset by a 0.2% fall in the production sector in Q4 2022.
In expenditure terms, growth in real household expenditure, government expenditure and gross fixed capital formation was offset by a fall in international trade flows in the fourth quarter.
Compared with the same quarter a year ago, the implied GDP deflator rose by 6.6%, primarily reflecting higher cost pressures faced by households.
Overall, GDP increased by an estimated 4% in 2022, following a 7.6% increase in 2021.
ONS Director of Economic Statistics Darren Morgan said: “The economy contracted sharply in December meaning, overall, there was no growth in the economy over the last three months of 2022.In December public services were hit by fewer operations and GP visits, partly due to the impact of strikes, as well as notably lower school attendance. Meanwhile, the break in Premier League football for the World Cup and postal strikes also caused a slowdown.
“However, these falls were partially offset by a strong month for lawyers, growth in car sales and the cold snap increasing energy generation. Across 2022 as a whole, the economy grew four percent. Despite recent squeezes in household incomes, restaurants, bars and travel agents had a strong year. Meanwhile, health and education also began to recover from the effects of the pandemic.”
