UK GDP grew 0.1% in the last three months of 2022, figures out today showed. GDP is now just 0.6% below pre-Covid levels and household finances were boosted by energy support payments.
Danni Hewson, AJ Bell head of financial analysis, comments on revised UK GDP figures: “As growth goes it’s pretty feeble but remember this was the moment the UK had been expected to enter a recession, so the fact GDP figures have been revised upwards is something to celebrate.
“Households have found their finances and savings bolstered by those energy support payments that have been dropping into accounts in dribs and drabs since October, along with finding their actual energy bills were substantially lower than they might have been thanks to the government’s cap.
“But this raises questions about whether the support should have been available to all or whether the money would have been better spent on targeted help.
“Consumers did spend less on both the real and virtual high street over Christmas, but the service sector was given a little nudge by Brits’ wanderlust. As those dark cold nights made many of us reach for an extra layer rather than bumping up the thermostat, it also made us long for sunnier climes and some people put their extra savings to work booking some summer sun and boosting business at travel agents.
“There was also a substantial uptick in construction, though the cheer in that sector will be tempered by today’s house price numbers which show the biggest monthly price fall since 2009.
“Momentum was well and truly torpedoed by the disastrous mini-Budget and its aftermath, and with lots of people really concerned about their mortgage payments its hard to see how confidence will recover in the short term.
“That’s already filtering through to housebuilders who have put some projects on the back burner as demand cools considerably.
“With just a day to go until energy support for businesses is significantly pared back, some companies have already warned they may have to scale back operating hours or close up shop altogether.
“SMEs are the lifeblood of the UK economy, so decreased productivity is likely to dampen growth in this new year.”