UK economy almost stalled in February even before Ukraine war
Are we headed for Stagflation? UK economy almost stalled in February even before Ukraine war with GDP up just 0.1% as inflation spikes towards double-digits
- UK economy almost stalled in February with growth coming in at just 1 per cent
- Experts warned there is likely to be prolonged period of weak GDP performance
- Inflation predicted to keep rising in coming months potentially to double digits
Stagflation fears were underlined today as it emerged the economy almost stalled in February.
Official figures showed GDP increased by just 0.1 per cent as the cost of living crisis began to bite, compared to the robust 0.8 per cent seen in January.
The gloomy data came even before the Russian invasion of Ukraine threw the global situation into chaos and sent oil and gas prices spiralling higher.
Experts warned it is likely to be the start of a ‘prolonged period of considerably weaker growth’ – while inflation is predicted to keep rising, possibly into double digits.
Chancellor Rishi Sunak – who is struggling to contain a furore over his family’s tax affairs – welcomed the fact the economy stayed in positive territory.
But he cautioned that while the ‘robust’ response to Vladimir Putin’s aggression was right it would create ‘additional economic uncertainty’.
Official figures showed GDP increased by just 0.1 per cent as the cost of living crisis began to bite, compared to the robust 0.8 per cent seen in January
ONS Director of Economic Statistics Darren Morgan said: ‘The economy was little changed in February with the easing of restrictions for overseas travel – and increased confidence in booking holidays in the UK – triggering strong growth in travel agencies, tour operators and hotels.
‘This was partially offset by the reduction of the Test and Trace and vaccination programmes, which made a strong contribution to GDP at the start of the year.
‘Manufacturing fell notably, with motor manufacturers continuing to struggle to source parts.’
The economy is now stands 1.5 per cent larger than its pre-pandemic level, having clawed back ground after the worst slump in a century.
Mr Sunak said: ‘I welcome the positive growth seen across the economy in February, which continues to recover from the pandemic, boosted by the support we provided.
‘Russia’s invasion of Ukraine is creating additional economic uncertainty here in the UK, but it is right that we are responding robustly against Putin’s unprovoked invasion.
‘We are supporting families with the cost of living with £22billion of support this financial year, and building a high productivity, low tax economy, including through a tax cut worth up to £1,000 for half a million small businesses.’
Chancellor Rishi Sunak – who is struggling to contain a furore over his family’s tax affairs – welcomed the fact the economy stayed in positive territory
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