The UK’s gross domestic product (GDP) flattened in February, according to the latest figures from the Office for National Statistics.
With just 0.1% growth, the UK slowed down from an already poor start to the year, with January seeing 0.4% growth. More specifically, February saw the services sector contract by 0.1%, production fall by 0.2% and construction grow by 2.4%.
“The UK economy is still on track to dodge a recession, despite low growth in February,” said Julian Jessop, a fellow at the Institute of Economic Affairs, the UK’s original free market think tank. “Activity was held back by widespread public sector and transport strike action, but the output of services provided by the private sector is continuing to recover.”
Early evidence suggests that the economy grew again in March and in the first quarter as a whole, probably by about 0.2-0.3%.
“Nonetheless, that would be little to cheer,” added Jessop. “Simply beating the gloomy forecasts of organisations such as the IMF is a pretty low bar. The UK economy risks being kept in the slow lane by a combination of high tax and spend policies, dysfunctional energy and housing markets, and a pervasive belief that government always knows best.”
This analysis is echoed and built on by Jonathan Moyes, head of investment research at the Wealth Club, one of the UK’s leading investment services for high net worth investors.
“Flat GDP growth was lower than the 0.1% expected,” he said. “The UK’s dominant services sector took a step back over the month as the teachers strikes took their toll on the economy.
“The release will do little to change the gloomy outlook for the economy. However, if one were looking for positives in the data, unseasonably warm weather and industrial action were the chief drivers of lower growth, rather than a downturn in general business and consumer spending. The consumer, the construction sector and part of the services sector such as financial services appear to be in good health.”