The lack of expansion was unanticipated; 0.1% had been anticipated.
According to official data, the British economy stagnated in February, with no growth in the gross domestic product.
The Office of National Statistics (ONS) data revealed that civil service strikes and low energy consumption countered growth in sectors like construction, which grew 2.4%.
The flatlining came as a surprise. The Reuters news agency polled economists who predicted 0.1% growth for the month.
The ONS reported a 0.1% decline in services production in February 2023, following a 0.7% increase in January 2023.
Teacher strikes lowered services industry growth by 1.7% in a month.
The public administration sector was the second largest contributor to negative expansion in the services industry.
Director of economic statistics at the ONS, Darren Morgan, stated that construction increased due to repair work and retail output increased because many stores had a “busy month.”
Mr. Morgan noted that the production of electricity and gas was reduced due to unseasonably warm and arid conditions. However, output in the arts, entertainment, and recreation sectors increased.
After 0.4% growth in January and 0.1% growth in the fourth quarter of 2022, the UK economy avoided recession.
Recent projections from the independent economic forecaster, the Office for Budget Responsibility (OBR), indicate that the United Kingdom will avoid recession in 2023, defined as two consecutive quarters of negative growth.
However, the economy is still expected to contract by 0.2% this year, and the fiscal watchdog has warned that living standards will decline by the greatest amount since records began.
Quarterly, the economy expanded marginally. The ONS recorded 0.1% GDP growth in the three months leading up to February.
Despite the stagnation, Chancellor Jeremy Hunt remained optimistic about the numbers.
He stated, “The economic outlook is brighter than anticipated; GDP grew in the three months leading up to February, and we are on track to avoid a recession thanks to a massive package of cost-of-living support for families and radical reforms to boost the labor market and business investment.
Rachel Reeves, the shadow chancellor for the Labour Party, criticized the government’s economic development record.
She stated, “Despite our immense promise and potential as a nation. Britain is still lagging on the global stage, with stagnant growth.”
Sluggish growth hurts families, major streets, and the economy, making us vulnerable to shocks.
“These results are precisely why Labour’s mission to secure the highest sustained growth in the G7 is so crucial – we need this level of ambition to strengthen our economy, get our high streets thriving again, and make families in every region of Britain better off.”
The chief economist of the Bank of England stated that the stagnating economy was “somewhat disappointing” but a significant improvement over the previous forecast of a recession.
Huw Pill, speaking at a Market News International Connect panel event, stated, “Last summer, we predicted a fairly severe and very protracted recession in the United Kingdom.
“Relative to this, the flattening of the economy as measured by the evolution of GDP represents a substantial improvement.”
