The UK economy grew modestly at the end of 2022 weathering the headwinds from high inflation squeezing household income and weak global conditions and thus avoid a technical recession, official data showed on Friday.
Gross domestic product grew 0.1 percent sequentially in the fourth quarter, after a first estimate of nil growth was revised, the Office for National Statistics reported. This followed a 0.1 percent decline in the third quarter.
The marginal growth at the end of the year helped the economy to avoid a technical recession that is defined as two consecutive quarters of fall in output.
On the production-side, the service sector expanded 0.1 percent following a first estimate of no growth. The sequential expansion in construction output was revised sharply to 1.3 percent from 0.3 percent.
Meanwhile, the production sector output was flat compared to the initial estimate of a 0.2 percent fall.
The expenditure-side showed that household expenditure grew 0.2 percent underpinned by spending on net tourism, transport and housing. Government spending gained 0.5 percent with the largest rise in public administration and defence, followed by health.
Gross fixed capital formation increased 0.3 percent but business investment decreased 0.2 percent.
Excluding the alignment and balancing adjustments, estimates showed that inventories fell GBP 2.2 billion in the fourth quarter.
The economy was 0.6 percent larger than a year earlier as higher inflation and a tightening in financial conditions weighed on the economy in recent quarters, the ONS said.
In the Spring budget statement announced earlier this month, Chancellor Jeremy Hunt said the economy will not enter a recession this year though a contraction of just 0.2 percent is on the cards.
The level of real GDP was still 0.6 percent below where it was during the fourth quarter of 2019, which was before the coronavirus pandemic broke-out. The decline was revised from the previous estimate of 0.8 percent.
GDP was estimated to have increased 4.1 percent in 2022, revised up from the previous estimate of 4.0 percent.
Further, data showed that the household saving ratio increased to 9.3 percent in the fourth quarter from 8.9 percent in the previous quarter.
Reflecting the improvement in investment income, the current account deficit narrowed to 0.4 percent of GDP in the fourth quarter, data showed.
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