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UK GDP: Not quite a recession

10th February 2023

Commenting on this morning’s UK GDP data Melanie Baker, Senior Economist at Royal London Asset Management, said:

“The UK escaped being in technical recession with two consecutive quarters of negative GDP growth in the second half of last year, but by the slimmest of margins. The UK economy didn’t shrink in Q4, but neither did it grow. The bigger point is that this stagnation isn’t new. The level of GDP hasn’t really grown since the end of 2021.

“Q4 itself was a bit of a ‘mixed bag’. Consumer spending grew in Q4, but barely. Business investment was surprisingly strong though. It will be interesting to see if that gets revised down in later releases. It isn’t obvious why business investment would have grown so much given interest rate rises and how soft some of the business survey indicators have been.

“Weakness in the economy in December will partly reflect strike activity, but cost-of-living pressures will likely have also played a role.

“The UK continues to face a long list of challenges and I don’t expect the economy to escape a technical recession altogether”.


The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.