UK Narrowly Avoids Recession as 4Q22 Shows Flat Growth despite December Slump

The United Kingdom narrowly avoided recession as economic growth in the final quarter of 2022 showed no movement, while shrinking 0.5% in December, which was higher than a consensus for a 0.3% contraction.

The U.K. would fall into a recession if its economy recorded negative growth in the fourth quarter, following a 0.2% contraction in the third. A two consecutive quarterly contraction marked a recession.

Last week, the Bank of England predicted that Britain would enter a shallow but prolonged recession, starting from the first quarter of this year and lasting for five quarters.

The increase in inflation impacted the living standard, which reached a 41-year high of 11.1% in October 2022, and firms and households felt the impact when the BOE quickly increased interest rates since December 2021.

The finance minister, Jeremy Hunt, stated that the British economy was more resilient than expected but still in danger, and that “if we stick to our plan to halve inflation this year, we can be confident of having among the best prospects for growth in Europe.”