UK economy narrowly escapes recession despite strikes

The UK economy has narrowly escaped recession despite soaring living costs due to high inflation and mass strikes across the country. The economy stagnated, or grew at zero, in the final quarter of last year, following a contraction in the third quarter, according to the Office for National Statistics.

This prevented a so-called technical recession for two consecutive quarters of contraction. Over the year as a whole, the UK economy grew by 4 per cent, after growing by 7.6 per cent in 2021. However, the UK economy is still smaller than it was at the end of 2019, leaving the UK alone among G7 nations in having not fully recovered from the coronavirus pandemic.

UK Chancellor of the Exchequer Jeremy Hunt welcomed news that the UK had avoided recession. “Our economy is more resilient than many feared,” he said. However, he warned that rising inflation was leading to a cost of living crisis and widespread industrial action.

Last year, the UK suffered its biggest industrial action since the 1980s, with an estimated millions of working days lost to strikes and work stoppages. Across sectors such as the railways, postal services and other public services, workers and unions are trying to demand better pay through measures to deal with high inflation. There will also be several strikes this year.

Although the outlook for the UK economy is less bleak than it was a few months ago, a recession is still likely. It is expected to start this quarter. And the economic contraction will be milder than previously thought. For example, the Bank of England is pricing in a slight downturn that will last until early 2024.

France is also expected to avoid a recession this winter, the head of the French central bank, Francois Villeroy de Galhau, said. “The French economy is slowing down but it is resisting. Last fall we were worried about a recession, but I think I can rule it out before 2023,” the bank governor told France 2 television. He also declared a recession earlier this week and expects the economy to grow by 0.2 percent in the first and second quarters.