‘Anxious times’ warns Sunak as UK economy shrinks in March
The UK economy contracted by 0.1% in March, as surging inflation took a toll on demand to offset the boost that had been expected from the end of COVID restrictions.
The monthly figure compares to no growth in February and 0.7% growth in January, while the quarterly figure (between January and March) showed a growth of 0.8%, which was down from 1.3% in the previous three months.
Chancellor Rishi Sunak said: “The UK economy recovered quickly from the worst of the pandemic and our growth in the first few months of the year was strong – faster than the US, Germany and Italy, but I know these are still anxious times.
“Our recovery is being disrupted by Putin’s barbaric invasion of Ukraine and other global challenges but we are continuing to help people where we can.
“Growth is the best way to hep families in the longer-term so as well as easing immediate pressure on households and businesses, we are investing in capital, people, and ideas to boost living standards in the future.”
The Office for National Statistics data was released as alarm bells ring over the country’s economic prospects, with the Bank of England warning last week that a recession now loomed large due to the cost of living crisis gathering pace.
Families and businesses are straining under a weight of global price increases largely caused by demand outstripping supply as the COVID crisis eases and, latterly, the effects of Russia’s war in Ukraine.
Separate figures released by the ONS next week are tipped by economists to show inflation nearing a 40-year high in April, at around 8.5%.
The leap, from the March level of 7%, will be mostly a consequence of higher energy costs being passed on down the supply chain, raising the cost of doing business and ultimately the cost of everyday goods and services.
There is also one direct price shock to be reflected for the first time: the unprecedented £693 hike in the energy price cap for households that took hold on 1 April.
