Slower growth than expected as GDP rises by only 0.1%

UK GDP rose by just 0.1% in February, new figures from the Office for National Statistics shows.

The slow growth in February follows 0.8% growth in January, and is below the 0.3% growth which economists expected.

It leaves the economy around 1.5% larger than two years ago, just before the UK’s first lockdowns.

The ONS reported the services sector grew by 0.2% and was the main contributor to February’s growth.

This was mainly driven by tourism-related industries with ‘increases in both travel agency, tour operator and other reservation service and related activities.’

Output in consumer-facing services grew by 0.7% in February 2022, following 2.0% growth in January (revised up from 1.7%); non-consumer facing services remained level on the month following 0.5% growth in January (revised down from 0.6%).

Darren Morgan, director of economic statistics said: “The economy was little changed in February with the easing of restrictions and overseas travel – and increased confidence in booking holidays in the UK – triggering strong growth in travel agencies, tour operators and hotels.”

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: “While economic output continued to rebound in February, the significant slowdown in growth indicates that the UK economy was losing steam even before the impact of Russia’s invasion of Ukraine.

“Tourism-related industries and accommodation services recorded the strongest improvements in the month as the end of Plan B restrictions, and reduced concerns over Omicron supported activity. However, this was mostly offset by a significant drop in NHS Test and Trace services and vaccine activity as well as declines in industrial and construction output.

“February’s slowdown is likely to be the start of a prolonged period of considerably weaker growth as rising inflation, surging energy bills and higher taxes increasingly damages key drivers of UK output, including consumer spending and business investment.

“Weakening health sector output following the end of free Covid testing and mass vaccinations, is also set to weigh on UK GDP in the near term.

“The Government must provide urgent financial support, through the expansion of the energy bills rebate scheme, to include small firms and energy intensive businesses, and an SME energy price cap to protect smaller firms from some of the price increases.”

 

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