According to new data from the Office for National Statistics (ONS), the economy expanded by just 0.1 percent in February. This was down from 0.8 percent in January, and well below the 0.3 percent forecast by economists. Now, as prices soar, inflation skyrockets and wages stagnate, Chancellor of the Exchequer Rishi Sunak is being urged to focus on domestic issues, rather than relying on his oft-repeated trope that “global issues” – predominantly the war in Ukraine – were to blame for current economic pressures.
According to the ONS data, the February slowdown followed a sharp fall in the production of cars and computer goods, as well as a reduction in public health services.
The figures show that monthly GDP is now 1.5 percent above its pre-pandemic level, but falling production means worse could yet be seen this year.
According to the ONS data, production slipped by 0.6 percent, largely due to the steep drop in car production caused by the ongoing chip shortage and the recent closure of Honda’s mega-plant in Swindon.
Growth was also hampered by the reduction in the NHS Test and Trace and vaccination programmes, which made a strong contribution to GDP at the start of the year, the figures show.
The UK’s economy grew by 7.4 percent last year in a record rebound from a devastating 2020, when the pandemic caused the biggest annual fall since just after World War One.
But last month, Mr Sunak revised the UK’s 2022 growth forecast down to 3.8 percent from six percent in light of the growing cost of living crisis and surging energy prices.
The Chancellor has been eager to focus on the fact that positive growth was recorded in February, despite the dismal outlook.
In a statement on Monday following the release of the figures, Mr Sunak said: “I welcome the positive growth seen across the economy in February, which continues to recover from the pandemic, boosted by the support we provided.
“Russia’s invasion of Ukraine is creating additional economic uncertainty here in the UK, but it is right that we are responding robustly against Putin’s unprovoked invasion.”
He added: “We are supporting families with the cost of living with £22billion of support this financial year.”
However, experts have been quick to point out that these figures are reflective of the period before Putin’s invasion of Ukraine, which began on February 24.
Alpesh Paleja, lead economist at the Confederation of British Industry (CBI) said: “Near-term challenges to the outlook have ramped up since [the beginning of the year], 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.”
The average UK household will experience a £2,553 drop in income this year, half of which is a result of the invasion of Ukraine, according to the Centre for Economics and Business Research (CEBR).
There is also expected to be a considerable jump in prices paid at the supermarket and petrol pump.