UK economic growth slows to 0.1% in February
UK gross domestic product now 1.5% higher than pre-pandemic level, government says
This comes despite a strong resurgence in both inbound and outbound tourist activity – including travel agencies, hotels and tour operators.
The 0.1% figure for February is lower than the 0.3% growth expected by most analysts.
Growth has slowed sharply since January, when gross domestic product (GDP) jumped 0.8%.
It happened as people returned to normal life after Omicron levels spiked in December 2021.
Data from the Office for National Statistics (ONS) showed monthly GDP is now 1.5% higher than its pre-pandemic level of February 2020.
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But despite a rise in tourism, the economy was dragged down by a drop in production, which fell 0.6% and construction, which fell 0.1%, according to the ONS.
Growth was also dampened by the reduction in the NHS Test and Trace and vaccines programmes, which contributed strongly to GDP at the start of the year.
The impact of killer storms Dudley, Eunice and Franklin may also have weighed on economic growth, the ONS said.
The report states: “Most of those reporting a negative impact were in service industries with comments received from companies operating in areas such as accounting, leisure parks and holiday resorts, photography, hairdressing and beauty, construction equipment rental, restaurants and takeaways, and marquee rent.
“However, some businesses reported a positive impact on revenue, such as those working in fencing, torch sales and temporary off-grid power.”
Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said: “While economic output continued to rebound in February, the significant slowdown in growth indicates that the UK economy was faltering before even the impact of the Russian invasion of Ukraine.
“Tourism-related industries and accommodation services saw the biggest improvements in the month as Plan B restrictions eased and concerns about Omicron-supported activity eased.
“However, this was mainly offset by a significant drop in NHS test and trace services and vaccine activity as well as a drop in industrial production and construction.
“The February slowdown will likely mark the start of a prolonged period of significantly weaker growth as rising inflation, rising energy bills and rising taxes increasingly hurt key drivers of output. UK, including consumer spending and business investment.”