It is hard to describe UK plc delivering a big fat zero as a positive for anyone but the economy has nonetheless kept one of the monsters under embattled prime minister Rishi Sunak’s bed from biting him.
For it to qualify for a stamp bearing a big red “R” for recession, there would need to be two consecutive three-month quarters in negative territory. But the Bank of England’s forecasters got it right this time with their prediction that the economy would flatline. No growth is not negative growth. The result is also better than the City had expected. Downing Street’s collective fingers will be crossed that the Bank gets it right again in future: it is predicting a modest pick-up in the current quarter.
A deeper dive into the figures will show you that while there was a modest rise in construction activity, and production (manufacturing, mining et al) was flat, the dominant services sector acted as a major drag, falling by 0.1 per cent. Notable within that is just how badly the consumer-facing service sector performed. It declined 0.7 per cent, in another demonstration of the impact the cost of living crisis, combined with the sharp rise in interest rates to 5.25 per cent, is having on the consumer economy.
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