By: Pramod Thomas
Official data released on Friday (31) indicated that the UK’s economy expanded in the fourth quarter of the previous year.
This growth was supported by increased business activity at travel agencies and state assistance to manage rising energy bills, which helped the country to avoid slipping into a recession.
The economic output grew by 0.1 per cent during the period from October to December compared to the previous quarter.
This was a smaller contraction than what was earlier estimated, as the economy had contracted by 0.1 per cent in the third quarter. The Office for National Statistics had initially reported that the economy had no growth in the final quarter of 2022.
“The economy performed a little more strongly in the latter half of last year than previously estimated, with later data showing telecommunications, construction and manufacturing all faring better than initially thought in the latest quarter,” ONS statistician Darren Morgan said.
Britain’s dominant services sector rose by 0.1 per cent, boosted by a nearly 11 per cent jump for travel agents.
Manufacturing grew by 0.5 per cent, driven by the often erratic pharmaceutical sector, and construction grew by 1.3 per cent.
Household savings increased, boosted by the government’s energy bill support scheme with the saving ratio rising to 9.3 per cent of disposable income, compared with its level of 5.6 per cent immediately before the pandemic.
Households’ disposable income increased by 1.3 per cent after four consecutive quarters of negative growth.
The International Monetary Fund said in January that Britain was on course to be the only Group of Seven major advanced economy that will shrink in 2023 although since then economic data has come in stronger than expected by analysts.
The ONS said business investment fell 0.2 per cent in quarterly terms, compared with a first estimate of a 4.8 per cent rise.
The ONS said changes to the way it calculates seasonal adjustments to the data were behind the big revision.
Finance minister Jeremy Hunt earlier this month announced new incentives designed to encourage companies to invest although the tax breaks were less generous than a previous scheme and came just as corporate tax is due to jump in April.
The ONS said British economic output in Q4 was 0.6 per cent below its level of late 2019, the only G7 economy not to have recovered from the Covid-19 pandemic.