The UK economy grew by 0.3% month-on-month in January, according to data published by the Office for National Statistics (ONS) this morning. This followed December’s 0.5% contraction, meaning that overall, the economy flatlined in the three months to January. While it is encouraging to see a return to growth for the UK economy, we believe that a recession in the first half of 2023 is still a distinct possibility as one-off factors boosting GDP growth in January wear off.
The monthly rebound was driven by the services sector, which grew by 0.5% in January, after falling by 0.8% in December. Meanwhile, production and construction output fell in January, by 0.3% and 1.7%, respectively. Growth in the services sector was particularly affected by the education sector, which saw an expansion of 2.5% in January following a fall of 2.6% in December.
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