Industrial action also subdued the economy in March, points out Moody’s Analytics economist Barbara Teixeira Araujo.
This means that the economy probably flatlined in the first quarter of this year, Teixeira Araujo predicts. But, Moody’s does forecast the economy will grow this year.
She writes: “The U.K. economy held flat in February, with the sectoral breakdown details showing that it was actually the construction sector that saved the day, as a sharp 2.4% m/m rebound in building activities offset falls in each production and services output.
“However, were it not for February’s strikes—especially within civil service and amongst teachers and university lectures—services sector output, and by extension GDP, would actually have risen.
“Looking ahead, broad-based industrial action also took place in March, which should keep a lid on first quarter’s GDP. Consequently, we are expecting activity to basically flatline in the January-March quarter.
“And the economy will only slowly recover thereafter, as still-high inflation and extremely-tight financial conditions are expect to keep on holding back growth. While we expect that an outright recession will be avoided in 2023, growth should clock in at only 0.4%, down from 4.1% in 2022.”