The UK’s economy showed no growth in February as the nation continued to narrowly avoid dipping into a recession despite decades-high inflation.
Teachers’ and Civil Service strike action acted as one of the biggest drags on gross domestic product (GDP), with thousands of workers walking out during the month.
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 per cent 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 per cent in February.
But looking at the broader picture, GDP grew by 0.1 per cent in the three months to February.
It comes as the ONS said the UK’s consumer prices index (CPI) inflation rate surged to 10.4 per cent in the same month, unexpectedly jumping higher despite efforts from the Bank of England to pull it back to its 2 per cent target.
“Brighter than expected”
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.”
But Labour shadow chancellor Rachel Reeves said that growth is “on the floor”.
She added: “The reality of growth inching along is families worse off, high streets in decline and a weaker economy that leaves us vulnerable to shocks.”
The British Chambers of Commerce (BCC), which represents thousands of businesses in different sectors, added that growth remains “stubbornly low” despite the UK continuing to technically avoid a recession.
David Bharier, the BCC’s head of research, said: “The Government has not addressed some of the major issues holding firms back, such as the unprecedented energy price shock and record tightness in the labour market.”
The economy grew by 0.4 per cent in January, revised from the 0.3 per cent the ONS previously predicted, meaning it saw a slowdown the following month.
Nevertheless, the UK avoided falling into a recession at the end of last year, with GDP edging up by 0.1 per cent over the final three months.
A recession is generally defined in the UK as two quarters of declining GDP in a row.
GDP would need to sink below 0.6 per cent in March for the economy to have shown negative growth in the latest quarter, the ONS said.
ONS director of economic statistics Darren Morgan said: “The economy saw no growth in February overall.
“Construction grew strongly after a poor January, with increased repair work taking place.
“There was also a boost from retailing, with many shops having a buoyant month.
“These were offset by the effects of Civil Service and teachers’ strike action, which impacted the public sector, and unseasonably mild weather led to falls in the use of electricity and gas.”
Tens of thousands of school teachers who are members of the National Education Union went on strike on February 1, affecting the majority of schools in England and Wales.
It marked the biggest strike day in a decade, with members of seven trade unions taking industrial action, affecting universities, trains and buses, as well as public administration affected by Civil Service strikes.
The Trades Union Congress (TUC) criticised the Prime Minister, Rishi Sunak, for holding back growth by not pushing through pay rises for public sector workers.
TUC general secretary Paul Nowak said: “Sunak and his ministers have sucked the life out of the economy by holding down the pay of millions of workers.
“Everyone’s cutting back their spending, so businesses are taking a hit too.”