UK economy avoids recession amid 0.1% growth

The UK economy narrowly avoided a recession during the fourth quarter (Oct-Dec) as UK GDP increased 0.1%, revised up from no growth, according to the latest data from the ONS.

In output terms, the services sector grew by 0.1% and the construction sector grew by 1.3%, while the production sector growth was flat in Quarter 4 2022.

The level of real GDP in Quarter 4 2022 is now estimated to be 0.6% below where it was pre-coronavirus (Covid-19) at Quarter 4 2019, revised upwards from the previous estimate of 0.8% below.

The GDP implied deflator rose by an upwardly revised 7.3% in the year to Quarter 4 2022, which is said primarily reflecting higher cost pressures faced by households.

Meanwhile the household saving ratio also increased to 9.3% in Quarter 4 2022, from 8.9% in the previous quarter.

Real households’ disposable income (RHDI) increased by 1.3% this quarter after four consecutive quarters of negative growth.

ONS director of economic statistics Darren Morgan said: “The economy performed a little more strongly in the latter half of last year than previously estimated, with later data showing telecommunications, construction and manufacturing all faring better than initially thought in the latest quarter.

“Households saved more in the last quarter, with their finances boosted by the Government’s energy bill support scheme. Meanwhile, the UK’s balance of payments deficit with the rest of the world narrowed, driven by increased foreign earnings by UK companies, particularly in the energy sector.”