Unexpectedly upbeat economic data released today has scuppered the “gloomy consensus” that the UK is in the midst of a devastating recession, an economist has said. However, Julian Jessop, a Fellow at the Institute of Economic Affairs also said the future remains uncertain – and stressed that Britain should be doing markedly better than it is.
The Office for National Statistics (ONS) recorded an increase of 0.1 percent in November – the most recent figures available – as the services sector remained in growth despite the soaring cost of living.
Experts at the ONS said the slight rise was supported by the technology sector and a strong showing by pubs and bars amid a boost from the winter World Cup in Qatar.
It nonetheless represents a slowdown in growth after GDP increased by 0.5 per cent in October.
Mr Jessop, in an op-ed written for the Daily Express, said: “The gloomy consensus that the UK is now in the worst recession of any major economy has already started to unravel.
“It is hard to get too excited about the growth of just 0.1 percent in November. But on top of the 0.5 percent rebound in October, this means that the UK probably avoided a second successive quarter of falling output in the final three months of 2022.”
He continued: “We may not therefore be in a ‘recession’ of any kind.
“This is uncertain. The ongoing strikes will have started to hit activity in December, so output might still have fallen by enough to prove the doom-mongers right.”
Nevertheless Mr Jessop stressed that there were other reasons to be positive.
He explained: “Inflation should tumble this year as global energy and food prices fall back.
“The Bank of England will not need to raise interest rates much further – if at all.
“The latest surveys of consumer and business confidence are also reassuring, and the jobs market is holding up well.”
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“But it is surely no coincidence that the better data for November coincided with the reversal of the 1.25 percent hikes in National Insurance for both employees and employers.”
Speaking earlier, ONS director of economic statistics Darren Morgan said: “The economy grew a little in November, with increases in telecommunications and computer programming helping to push the economy forward.
“Pubs and bars also did well as people went out to watch World Cup games.
He added: “This was partially offset by further falls in some manufacturing industries, including the often-erratic pharmaceutical industry, as well as falls in transport and postal, partially due to the impact of strikes.
“Over the last three months, however, the economy still shrank – mainly due to the impact of the extra bank holiday for the funeral of Her Majesty Queen Elizabeth in September.”