UK economy marginally expanded in final quarter of 2022, says ONS

The UK financial system was extra resilient than beforehand estimated within the closing three months of 2022, in keeping with revised knowledge, with the federal government easing the influence of upper vitality prices on households at the same time as enterprise funding fell.

The Workplace for Nationwide Statistics mentioned on Friday that gross home product rose by 0.1 per cent between the third and fourth quarters of final 12 months, quite than remaining unchanged, as indicated in its preliminary estimates.

The uptick adopted a 0.1 per cent contraction within the three months to September 2022, which the ONS first estimated as a 0.2 per cent drop.

Nonetheless, the UK stays the one G7 financial system that has not returned to its pre-coronavirus pandemic measurement, contrasting with an growth within the US and the eurozone. Within the closing three months of 2022, UK output was 0.6 per cent under its stage in the identical interval in 2019, in keeping with the ONS. 

Philip Shaw, economist at Investec, mentioned Friday’s knowledge took “the UK a bit of additional away from the recessionary hazard zone”. However he added that it did “not change the general image that the financial system’s efficiency was lacklustre over the second half of final 12 months as the price of dwelling disaster hit exhausting”.

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The ONS’s revised figures confirmed a drop of 0.2 per cent in enterprise funding within the closing quarter of 2022, which remained 2.2 per cent under its pre-pandemic ranges and has stagnated because the Brexit vote in 2016.

The autumn from preliminary estimates of a 4.8 per cent rise got here regardless of the federal government’s “super-deduction” scheme, which provided firms 130 per cent tax aid on purchases of apparatus between April 2021 and March this 12 months.

Households proved to be extra resilient, with their actual disposable revenue rising by 1.3 per cent within the closing quarter of 2022 after 12 months of decline. The ONS mentioned the growth within the sum of money individuals retained after direct taxes was pushed largely by the £5.7bn paid out below the federal government’s vitality payments help scheme.

The rise helped households put extra money away, with the typical proportion of disposable revenue saved rising from 8.9 per cent within the third quarter of 2022 to 9.3 per cent within the closing quarter.

Family spending was as much as 0.2 per cent, with the rise pushed by increased transport and housing prices in addition to tourism.

The UK’s present account deficit, a measure of the extent to which the UK is reliant on inflows of overseas cash, additionally narrowed to £21.1bn, or 3.3 per cent of GDP, within the closing quarter of 2022, from 4.2 per cent within the earlier three months. 

Nonetheless, some economists warned that the financial system would stay below strain amid nonetheless elevated value rises, and as rising borrowing prices had been felt by companies and households.

Thomas Pugh, economist at RSM UK, mentioned “the squeeze on family actual incomes will intensify over the following six months, as rising rates of interest mix with excessive inflation”.

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