UK economy falls short of City expectations
Successive strikes this year mean the spectre of recession is looming larger again after the British economy recorded zero growth in February, Melissa Lawford writes.
Monthly real gross domestic product (GDP) was flat in February, according to the Office for National Statistics. This fell short of the consensus among City economists, who had expected 0.1pc growth.
It followed 0.4pc growth in January, which was revised up from 0.3pc. Strikes drove a 0.1pc fall in services, after 0.7pc growth in January.
The largest contributors to this fall came from education, which fell by 1.7pc in February following teachers’ strikes. This drop nearly reversed the 2.5pc growth recorded in January.
Public administration also fell by 1.1pc following industrial action in the civil service in February.
Construction, however, is rebounding. This sector grew by 2.4pc in February, bouncing back after a 1.7pc decline in January. Early survey data suggests that this was driven by the civil engineering sector rather than housebuilding.
Across the three months to February, the UK economy grew by just 0.1pc. Monthly GDP was up 0.3pc on the pre-coronavirus level.
The data followed a new forecast from the International Monetary Fund that the UK economy would contract by 0.3pc across 2023, the weakest performance of any large economy and worse than both Russia and Germany.
Good morning
The UK economy stagnated in February amid industrial action across sectors, while Tesco will report its full year results this morning.
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1) IMF is wrong about Britain, says Hunt | Chancellor insists UK can beat gloomy economic predictions of Washington-based fund
2) Bank runs at deadliest in digital age, warns Bailey | Social media fuels rumour and hastens withdrawals as funds are transferred online, Governor tells IMF
3) Bankers refusing to return to the office will be punished, warns JP Morgan | Employees are still failing to hit minimum office attendance target of three days a week
4) HMRC claws back £700m in inheritance tax raid | Families told to pay death duties after taxman concludes they breached regulations
5) US inflation falls to lowest level in two years | Surprisingly good figures suggest price pressures have turned a corner
What happened overnight
Wall Street stocks closed lower after minutes from the Federal Reserve's March policy meeting revealed concerns among rate setters that banking pressures could tip the economy into a mild recession.
The Dow Jones Industrial Average finished down 0.1pc at 33,646.50. The S&P 500 closed 0.4pc lower at 4,091.95, while the tech-rich Nasdaq composite declined 0.9pc to 11,929.34.
The latest comments from Federal Reserve officials reversed earlier gains after new data showed that US inflation has fallen to its lowest level in two years, raising hopes that the central bank will soon pause interest rate hikes.
The rate-sensitive two-year Treasury yield dipped 8.8 basis points to 3.970pc and the benchmark 10-year slid 3 basis points to 3.404pc.
Asian stocks trimmed earlier losses as traders digested moderating inflation data in the US.
Benchmark indexes pared declines in Japan, South Korea and Australia. Meanwhile, Hong Kong stocks sank more than 1pc at the open on Thursday.
The Hang Seng Index shed 1.63pc, the Shanghai Composite Index dropped 0.18pc and the Shenzhen Composite Index on China's second exchange lost 0.29pc.
The benchmark Nikkei 225 index was also down 0.32pc in early trade, while the broader Topix index dipped 0.26pc.