THE UK economy stalled in February after growing in January, according to GDP data released today.
The latest figures show the economy stayed flat at no growth, compared to growth of 0.4% in January.
GDP figures stayed flat in February
The numbers show that the services sector fell by 0.1% in February, after growing by 0.7% in the month before.
In comparison, production also fell, but by 0.2% while the construction sector grew by 2.4%.
While GDP flatlined after growing at the start of the year, it will mean the country avoids a recession.
Chancellor of the Exchequer 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.”
GDP is a measure of the size of an economy. If it’s rising then the economy is growing, if it’s falling then it’s shrinking.
The UK economy was on a return to growth in January after it shrunk by 0.5% in December and grew just 0.1% in November.
The ONS said the January boost came from the services sector, which grew by 0.5% after falling by 0.8% in December.
David Bharier, head of research at the British Chambers of Commerce said: “Although today’s GDP figures indicate the UK economy continues to technically avoid a recession, it’s now clear we are stuck in a prolonged period of almost no growth.
“After a sharp drop in business confidence last year, our latest research shows that optimism among SMEs is now on the way up.
“But this is yet to translate into an improvement to business conditions in general.”
What does it mean for my money?
A healthy economy is one that is growing and not in recession so the latest figures should be good news for consumers.
A country is in recession if there are two consecutive quarters of Gross Domestic Product (GDP) falling.
The year is split into four three-month quarters.
The economy remained unchanged in the three months to January, which means a recession was avoided.
Recessions are bad news because it usually means jobs will be lost and wages will stall.
It can cause businesses to go into administration or bust too.
This, in turn, means the government gets less tax, which could mean cuts to public services and benefits such as Universal Credit. Tax rates might go up too.
The UK last went into recession in 2020 after the coronavirus pandemic hit, shutting down large parts of the economy.
The 2008 recession saw the loss of a number of high street stores including music retailer Zavvi, clothes shop Principles and Woolworths.
What is a recession and what does it mean for your finances?
Recessions are worrying because they tend to lead to unemployment and wage stagnation.
This consequently means the government gets less tax, which could mean cuts to services and benefits, or that rates go up.
There are lots of different reasons why a country may head into recession.
The UK last went into recession in 2020 due to the coronavirus pandemic, and there was a more severe one in 2008/9 when the global financial crisis hit.
Going into recession can have a big impact on your finances and job losses are common as companies let people go to cut their costs and stay afloat.
Job losses are common, as companies try to cut their costs to stay afloat.
The number of people in debt and arrears is also likely to soar, and there could be more defaults on loans and mortgages or repossessions and bankruptcies.
There are some things you can do to shore up your finances if you’re worried about a recession.
Tracking your monthly outgoings, making a note of the date that bills are paid and looking for areas to cut back is a good first step.
Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, said: “Reading the tea leaves of economic growth has been more challenging than ever, in large part due to disruption from intermittent industrial action.
“Today’s GDP figures could have easily been a few tenths of a percentage point in the other direction, revealing economic decline or, as expected, growth, instead of stagnation at 0%.
“The metrics have surprised multiple times in the past few months.”
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