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Surprisingly, the UK economy grew in November, according to official numbers. But the World Cup helped with this, of course.
Gross domestic product (GDP), a key economic indicator that includes the output of services, construction, and manufacturing, went up by 0.1% in the UK.
The Office of National Statistics (ONS) said that pubs and restaurants helped the economy grow because people went out to watch football.
But growth has slowed down a lot since October. Part of the reason for this is striking.
In November, rail workers and Royal Mail employees went on strike. Darren Morgan, the director of economic statistics at the ONS, said on the BBC show Today, “We saw the effects of industrial action in Today’s numbers.
In December, more strikes were at six UK airports involving both NHS and Border Force workers.
Even though things got better in November, it still needs to be clarified if the UK will stay out of a recession this year. The economy grew by 0.5% in October because businesses reopened after being closed in September for Queen Elizabeth II’s funeral.
When the economy shrinks for two successive three-month periods, or “quarters,” this is called a recession.
The UK lost 0.3% of what it made from July to September.
Prices are still going up in the UK at the fastest rate in 40 years. This is called inflation. This is mostly because energy costs are going up. The Bank of England has said since December 2021 that it will raise interest rates more than once to slow down consumer demand and keep prices from increasing too much.
“We have a clear plan to cut inflation in half this year,” said Jeremy Hunt, the Chancellor. Inflation is a sneaky hidden tax that has caused interest rates and mortgage costs to go up and has slowed growth worldwide.
The ONS says GDP fell by 0.3% from September to November. This was mostly because there was an extra bank holiday for the state funeral in September.
Rachel Reeves, the shadow chancellor, said, “Families who are already struggling with the rising cost of living will be very worried by the news of more economic pain.”
After the numbers for November were slightly better than expected, Pantheon Macroeconomics said, “It is still too early to say if the UK economy is already in recession.”
Mr. Morgan from the ONS said the economy would have to shrink by 0.6% in December for the UK to slow down.
He said that one in six businesses had told the ONS that “industrial action” had hurt them, so “we would have to wait a few weeks to see how the effects of industrial action affect our December figure.”
Pantheon said that the GDP could drop significantly in December because “all the major business surveys point to falling production” and “heavy snowfall and, to a lesser extent, rail strikes likely slowed down activity for a while.”
In November, the manufacturing sector shrunk, and the construction sector stayed the same, but the services sector grew. There are many industries in the services sector, from hospitality to accounting.
“Job agencies did pretty well,” said Mr. Morgan. But, according to our labour market data, this could be because businesses are looking for help to fill job openings, which has been a problem in some sectors.
The ONS also said there was “anecdotal evidence” that the Fifa World Cup had helped some businesses, like pubs, restaurants, wine sales, and pizza delivery orders.
Even though the economy grew in November, a surprise, the long-term trend is still down. So overall, the UK economy still looks weak, but we will know if it’s in a recession once the next numbers come out in a month.
Because of the World Cup, pubs, pizza delivery, and advertising all did better, which helped the economy more than usual. But some of the monthly numbers from last year were changed to be lower, so the more stable three-month measure is going down. Strikes partly caused the 4.7% and 3.1% drops in transportation and postal services.
Because of a mix of new and one-time factors and changes to statistics, the Bank of England will probably still raise rates again next month when it does its most thorough look at the state of the economy.
The UK economy worsened late last year
According to revised numbers, the UK economy shrank more than expected in the three months leading up to September.
The ONS said that business investment did worse than first thought, which is why the economy shrank by 0.3% instead of 0.2%.
The growth rates for the first half of 2022 have also been changed.
In the third quarter of 2022, the UK is expected to go into recession because rising prices will hurt growth.
A country’s economy is said to be in recession when it shrinks for two consecutive three-month periods, or “quarters.” This is because companies usually make less money, pay goes down, and the number of people who need jobs increases. This means that the government needs more tax money to pay for services for the public.
Opinions expressed by Texas Today contributors are their own.
