British economy defies expectations to post 0.1% growth in fourth quarter

Chancellor of the Exchequer Jeremy Hunt said Friday's GDP figures showed the "underlying resilience" of the British economy. File Photo by U.K. Parliament/EPA-EFE
1 of 2 | Chancellor of the Exchequer Jeremy Hunt said Friday's GDP figures showed the "underlying resilience" of the British economy. File Photo by U.K. Parliament/EPA-EFE

March 31 (UPI) -- Britain's economy narrowly avoided going into a recession in the fourth quarter of last year and instead defied expectations by growing slightly, the country's main statistical agency said Friday.

Revised figures show the economy, which the Office for National Statistics had previously said flatlined in the October to December quarter, actually grew by 0.1% driven by telecommunications, construction, and manufacturing.


The largest contribution came from administrative and support service activities, particularly travel agents, which increased by 10.8%. But overall services sector growth came to a virtual standstill, slowing to 0.1%.

Britain would have been in a recession had growth been negative following straight-on from the economy shrinking by -0.2% in the previous July to September quarter. Growth for that quarter has now also been revised up to -0.1%.

"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," said ONS Economic Statistics Director Darren Morgan in a statement.


The economy grew despite the fact that people saved more in part due to their finances receiving a boost from the government's energy support scheme under which households received an $82 rebate on their monthly bill, Morgan said.

Growth also received a boost from a narrowing of the country's balance of payments deficit with the rest of the world driven by higher overseas earnings of British companies, particularly in the energy sector.

British oil giants Shell and BP -- the no. 4 and no. 8 oil global oil companies -- make large proportions of their profits overseas.

However, growth was still 0.6% below where it was both in the fourth quarter of 2021 and the fourth quarter of 2019, pre-COVID-19.

Jeremy Hunt who hailed the figures as proof of the "underlying resilience" in the British economy, acknowledged families are still facing real pressure.

"We have stepped up with immediate relief worth an average of $4,081 per household, including paying half of people's energy bills -- funded by windfall taxes [on oil and gas companies]," Hunt said in a Twitter post.

The Labor opposition's shadow chancellor Rachel Reeves said the figures showed Britain was still the only G7 economy that still had to recover from the impact of COVID-19 on its economy.


"We can and should be doing so much better than this. Labor's plan will get our economy growing and make every part of the U.K. better off," she said in a post on Twitter.

"Where is the government's plan for growth to get us off this path of managed decline? Labor's mission to secure the highest sustained growth in the G7 will help us lead the pack."

The ONS said there was evidence that strikes by workers in postal, courier, and railway industries during the fourth quarter had had a broader impact that had spread across a wide range of industries.

The country is battling red-hot inflation of 10.4% which forced an 11th consecutive interest rate hike by the Bank of England last week. Bank Rate now stands at 4.25%, its highest level in 15 years.

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