Britain’s gross domestic product rose slightly by 0.1 percent in the first quarter, dispelling fears of a recession that was hanging over the country’s economy at the beginning of the year, which on the other hand showed signs of weakness last March.
Gross domestic product rose in the first three months of the year, in line with economists’ forecasts, a first estimate released (Friday) by the National Statistical Office showed, after rising just 0.1 percent in the last quarter of 2022.
On the other hand, the economy contracted at the end of the quarter by 0.3 percent in March, after it was standing still in February, and rose 0.5 percent in January, as indicated by the Institute of Statistics.
Darren Morgan, director of economic statistics at the institute, said on Twitter that growth in the first quarter “was driven by the informatics and construction sectors,” but “the economy slowed due to strikes to raise wages in the health, education and public administration sectors.”
In March, the economy witnessed a “generalized decline in the services sector,” as well as a decline in car sales. It was a tough month for the warehousing, distribution and retail sectors, Morgan added.
“A weaker economy in March confirms its fragility, despite lower energy prices, improved supply chains and consumer confidence,” said Yael Selvin, an economist at KPMG.
And because of inflation, which still exceeds 10 percent, it was expected until recently that the British economy would witness a contraction this year, after it narrowly avoided that at the end of 2022… But the latest forecasts, including those published by the Bank of England (Thursday), are more optimistic.
To combat inflation, the Bank of England (Thursday) raised interest rates for the 12th time in a row to 4.5 percent, bringing it to the highest level since the financial crisis in October 2008, considering that the British economy is in a stronger position than expected. It is now expected to grow by 0.25 percent in 2023 without recording a contraction in any quarter of this year.
“If a recession is likely to be ruled out, vulnerabilities arising from higher borrowing costs and tightening credit are expected to affect business and household activity this year, and business investment and consumption expenditures are expected to remain moderate in the short term,” Selvin said.
British Finance Minister Jeremy Hunt, in a statement (Friday), welcomed the “good news” about growth in the first quarter. But in order to achieve its goals, the government will have to focus on a “competitive” tax policy and address labor and productivity issues that are hampering the economy.-
Inflation slowed slightly in March to 10.1 percent, but is still driven by food prices, and Britain is the only G7 country to exceed this 10 percent rate.
And according to the Bank of England (Thursday), it is expected to start declining rapidly as soon as the April data is published. The rise in prices, which is causing a severe living crisis, is also behind employee strikes in many sectors for about a year, which contributes to the slowdown in the economy.
Martin Beck, an economist at “Ernst Young”, told Agence France-Presse, “The continuous strikes and the additional day off in May (on the occasion of the coronation of King Charles III) will affect activity in the second quarter, to the extent that it is expected that there will be A slight decline.” But “this matter will only be a temporary setback.” He also predicted that “the recovery will accelerate in the second quarter of 2023,” with the expected end of social movements, the easing of the budget, and the decline in inflation, which “will contribute to restoring families’ purchasing power.”
But the crises seem likely to continue for a long time, as railway workers in Britain began a strike on Friday, in an escalation of their protests over wages.
And “Bloomberg” reported that the train drivers, represented by the “Asleef” union, are striking from work (Friday), amid expectations that the streets will be quieter than usual, with more employees heading to work from home.
On Saturday, the National Union of Railway, Maritime and Land Transport (RMT) workers will start a strike in which thousands of railway workers participate, in a move that would impede the closing ceremony of the Eurovision Song Contest, which is being held in Liverpool.
“By organizing a strike during the first (Eurovision) contest to be held in Britain in 25 years, the (RMT) union is simply disrespecting the passengers it serves,” Bloomberg quoted British Transport Secretary Mark Harper as saying.
Harper stated that members of the “RMT” union received an offer to increase their wages by 5 percent, in addition to another 4 percent for a period of two years, while paying more to workers who receive lower salaries, while train drivers will receive a basic salary of approximately 65 thousand pounds sterling. ($81.4 thousand) according to the latest proposals.