UK narrowly avoided recession with flat growth at end of 2022

The UK economy recorded zero growth between October and December last year, indicating the country may have narrowly avoided a recession, according to data from the Office for National Statistics (ONS).

A recession is often defined by analysts as when the economy shrinks for two consecutive three-month periods. The economy grew by 4% in 2022 as a whole, and fell by 0.5% in December.

Lawyers had a good month, and people also spent more on energy as they heated their homes during the cold snap.

As ITV News Business and Economics Editor Joel Hills notes, the International Monetary Fund and the Bank of England both still expect the UK to enter recession at some point this year, with the UK remaining the only G7 economy not to have returned to its pre-Covid size.

The latest figures show a "technical recession has been avoided by a whisker", he writes.

Darren Morgan, director of economic statistics at the ONS, 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 4%. 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.”

Chancellor Jeremy Hunt warned the UK was “not out the woods yet”, particularly when it comes to inflation.

Mr Hunt said the government is giving as much financial support to struggling families as it can, with around £3,500 given for each family across the country on average last year. But he insisted that any extra help has to be within the context of "being responsible with public finances" as he argued that interest rates would go up if not - and this ultimately would hurt people with mortgages.

Joel Hills pressed the chancellor on what extra help will be given to struggling families

"The public finances haven't changed dramatically since the autumn statement, which was only three months ago," the chancellor said when asked by Joel Hills if more help was on the way. "What help we can give we will. But it has to be within the context of not losing the gains that we have had since we stabilised the economy, stabilised interest rates." On the wave of industrial action hitting the public sector, he said the strikes are "very damaging" and "wholly unnecessary". With further strikes facing the country in the coming months, he said he is willing to talk to the unions as the government want to resolve the pay dispute but not over "measures that entrench high inflation".

"We need to listen to the very clear warning given by the Governor of the Bank of England yesterday who said that if additional pay rises are funded through borrowing that is inflationary," he said.

Shadow Chancellor Rachel Reeves, meanwhile, said the ONS figures show Britain's economy is "stuck in the slow lane" as she vowed Labour would help tackle the cost-of-living crisis if in power.

"Today's figures show us how – despite Britain's great potential – our economy is stuck in the slow lane," she said. "We can be a leader in the industries of the future that will help grow our economy. "And we must bring in urgent measures to prevent yet more harm from the cost of living crisis, using a proper windfall tax on oil and gas giants to stop the energy price cap going up in April so that people have more money in their pockets."

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