The UK’s economic growth slowed sharply in February, even before the war in Ukraine piled further strains on the global economy, the latest figures show.
The UK’s gross domestic product (GDP) grew just by 0.1 percent in February, compared with 0.8 percent in January, the Office for National Statistics (ONS) said on April 11.
This was below an expected rise of 0.3 percent predicted by economists.
Services grew by 0.2 percent and was the main contributor to February’s GDP growth. This was partially offset by production, which fell by 0.6 percent and construction, which fell by 0.1 percent, ONS said.
The growth in services was mainly driven by tourism-related industries, which got a boost from the easing and eventual lifting of CCP (Chinese Communist Party) virus restrictions. Travel agencies, tour operators, and others grew by 33.1 percent from the previous month, and accommodation grew by 23 percent.
But GDP was hit as government spending on the COVID-19 test and trace system and vaccination booster programme slowed in February.
There were also slowdowns in production output, which fell by 0.6 percent. Manufacturing was the main driver of negative growth, falling by 0.4 percent.
The biggest negative contributor in consumer-facing services was the motor industry with sales of cars and repairs down. This also impacted car factories, which saw slowdowns, along with falls in the manufacturing of computers and other electronics, where chip shortages continue to bite.
Construction output decreased by 0.1 percent following growth of 1.6 percent in the preceding month.
Suren Thiru, head of economics at the British Chambers of Commerce, said, “While economic output continued to rebound in February, the significant slowdown in growth indicates that the UK economy was losing steam even before the impact of Russia’s invasion of Ukraine.”
“February’s slowdown is likely to be the start of a prolonged period of considerably weaker growth as rising inflation, surging energy bills and higher taxes increasingly damages key drivers of UK output, including consumer spending and business investment,” he said.
Alpesh Paleja, lead economist at the Confederation of British Industry, said: “Following the bounce at the start of the year, it’s no surprise that economic growth slowed in February. Near-term challenges to the outlook have ramped up since, with a growing cost-of-living crunch set to weigh on growth.”
“Businesses are also grappling with headwinds from the Ukraine conflict, which is exacerbating cost pressures and supply chain disruption,” he said.
Chancellor Rishi Sunak welcomed the “positive growth seen across the economy,” but warned that Russia’s invasion of Ukraine is “creating additional economic uncertainty here in the UK.”
PA Media contributed to this report.