Business

UK economy grows just 0.1% in February

The UK economy barely expanded in February on the back of weaker healthcare activity, supply chain disruptions and storms, raising concerns about its resilience as the cost of living rises.

Gross domestic production grew 0.1 percent between January and February, up from 0.8 percent in the previous month, according to data released by the Bureau for National Statistics on Monday. That was weaker than the 0.3 percent forecast by economists polled by Reuters.

Darren Morgan, ONS director of economic statistics, said: “The economy was little changed in February as restrictions on international travel eased – and confidence in booking holidays in the UK rose – prompting strong growth in travel agents, tour operators and hotels triggered. ”

However, he added that this was partially offset by reductions in the test-and-trace and vaccination program, which were strong contributors to GDP earlier in the year.

Line chart of recalculated GDP index, Q4 2019=100, shows UK economy barely growing in February

Manufacturing output fell 0.4 percent as automakers struggled to source parts. Construction output also fell 0.1 percent as storms disrupted activity.

Output growth in the services sector slowed to 0.2 percent from 0.8 percent in the previous month. The accommodation and gastronomy business made the largest positive contribution to growth with an increase of 8.6 percent. However, this was offset by human health and social work activity, which fell 3.8 percent, reflecting the reduction in immunization programs.

The economy is now 1.5 percent larger than before the pandemic.

The figures largely predate the Russian invasion of Ukraine, which pushed up energy and commodity prices and costs for British businesses and consumers.

Samuel Tombs, an economist at Pantheon Macroeconomics, expects Q2 GDP to contract “as the consumer spending recovery tapers off and healthcare output continues to bottom.”

https://www.ft.com/content/20bb4602-8097-4d42-ad7e-845c86f1b2d6 UK economy grows just 0.1% in February

Adam Bradshaw

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