GDP: UK economy flatlines with zero growth as strikes impact bites

Although the UK economy flatlined in February it is not all doom and gloom as ITV News' Economics Editor Joel Hills explains

The UK economy showed no growth in February, as it narrowly continues to avoid recession amid wide-spread strike action, according to the Office for National Statistics (ONS).

Gross Domestic Product (GDP) growth was 0.0%, statisticians' latest estimate said on Thursday morning.

Teachers’ and Civil Service workers' strikes have been cited as among the biggest drags on GDP, as thousands of workers walked out in recent months.

The largest contributor to negative growth across the service industry came from education, which fell by 1.7% in a month where teachers went on strike.

The decline in the services sector offset growth in the construction sector, which saw a rebound particularly due to more mild weather and from new work and repairs.

Analysts had expected GDP to grow by 0.1% in February, month-on-month, according to a consensus forecast supplied by Pantheon Macroeconomics.

To two decimal places, the economy eked up by just 0.02% in February.

It follows growth of 0.4% in January and confirmation from the chancellor and the OBR that the UK economy would avoid recession in 2023, despite previous predictions.

Chancellor Jeremy Hunt said: “The economic outlook is looking brighter than expected – GDP grew in the three months to February and we are set to avoid recession thanks to the steps we have taken through a massive package of cost of living support for families and radical reforms to boost the jobs market and business investment.”

Labour shadow chancellor Rachel Reeves said: “Despite our enormous promise and potential as a country, Britain is still lagging behind on the global stage with growth on the floor.

“The reality of growth inching along is families worse off, high streets in decline and a weaker economy that leaves us vulnerable to shocks.

“These results are exactly why Labour’s mission to secure the highest sustained growth in the G7 is so important – it’s that level of ambition that we need to strengthen our economy, get our high streets thriving again and make families across every part of Britain better off.”

Why is the UK's economy so sluggish?

On a quarterly, basis the economy grew slightly by 0.1% in the three months leading up to February.

The services sector fell by 0.1% in February, after growing by 0.7% the previous month.

Strike actions and low energy consumption offset the 2.4% growth felt by the construction industry.

The largest contributor to negative growth across the service industry came from education, which fell by 1.7% in a month where teachers went on strike.

Businesses are feeling the squeeze as consumers tighten their belts.

On Thursday, supermarket giant Tesco announced its profit had nearly halved before tax in the last financial year, even as sales jumped.

Pre-tax profit dropped from just over £2 billion to around £1 billion, however adjusted operating profit was only down 6.9% to £2.6 billion.

The profit was hit by a trio of issues, including lower sales volumes, investment in the business and steep cost rises, Tesco said.

“It’s been an incredibly tough year for many of our customers, and we have been determined to do everything we can to help,” said chief executive Ken Murphy.

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