Official figures show that the UK economy unexpectedly expanded in November, aided by a boost from the World Cup. The economy grew by 0.1%, aided by demand for services in the technology sector and despite rising prices putting pressure on households.
According to the Office for National Statistics (ONS), pubs and restaurants boosted growth as people went out to watch football.
However, it is unclear whether rising costs will send the UK into recession.
Although the November reading of gross domestic product – a measure of all business, government, and consumer activity in the UK – was much higher than expected, the overall picture still suggests the economy is stagnating as food and energy prices rise and people cut back.
The November increase is a slowdown from the 0.5% increase in October, which was largely due to a rebound from businesses that closed to commemorate Queen Elizabeth II’s funeral in September.
According to economists, the latest data makes it less clear whether the UK entered a recession at the end of last year.
A recession is defined as two consecutive three-month periods of declining economic output, or quarters.
When a country experiences a recession, it indicates that its economy is suffering. Companies typically make less money during a downturn, and the number of unemployed people increases. Graduates and school leavers are also having difficulty finding their first job.
The UK economy shrank by 0.3% between July and September.
Economic growth has slowed sharply since October, owing in part to strike action.
In November, rail workers and Royal Mail employees went on strike over pay and working conditions. “We definitely saw the impact of industrial action in today’s figures,” Darren Morgan, director of economic statistics at the ONS, said.
“We saw reasonably large falls in rail transport, postal work and warehousing and this sector had the biggest drag on the economy in November.”
In December, the strike was extended to include NHS workers as well as Border Force personnel at six UK airports. It may have an impact on next month’s figures, which will show whether the technical definition of a recession has been met.
Morgan predicted that the UK economy would have to contract by 0.6% in December to enter a recession.
Although there was a brief improvement in November, the Federation of Small Businesses (FSB) warned that economic concerns have yet to be addressed.
The national chair of the FSB, Martin McTague, said: “With costs remaining high for small firms and households alike, policymakers cannot rest on their laurels. Inflation needs to be brought down, there remains huge uncertainty over energy prices and consumer confidence remains stubbornly low.”
Staff at Gtech in Worcester have definitely noticed the economy slowing.
Cordless vacuum cleaners and other tools are designed and sold by the company. Demand has begun to decline following a busy pandemic, when people were eager to invest in keeping their homes and gardens looking nice.
“We can feel that, yes, there’s probably a recession coming on, people are finding things difficult,” suggests Nick Grey, founder of the business. “They’re kind of worried about their basic costs of heating and fuel and all the rest of it and the worries of inflation.”
Despite this, the company gave its employees a £1,000 cost-of-living payment in December, and gave lower-paid employees a more generous pay raise than senior employees because they are more affected by rising costs.
“I think the next 12 months are going to be tough,” says Grey. “We’re just trying to make sure we do the basics well, and that when all this blows over, we’re positioned well to grow and recover.”
(Adapted from BBC.com)