Britain's GDP shrinks in March as rising cost-of-living crisis bites

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IANS | 13 May, 2022
Britain's gross domestic product (GDP) fell by 0.1 per cent in March after registering no growth in February, the UK's Office for National Statistics (ONS) said.

"Services fell by 0.2 per cent in March and was the main contributor to the month's fall in GDP, reflecting a large decrease in the wholesale and retail trade and repair of motor vehicles and motorcycles industry," Xinhua news agency quoted the ONS as saying in a statement on Thursday.

Production also fell in March by 0.2 per cent, while construction grew by 1.7 per cent.

Meanwhile, the country's GDP grew by 0.8 per cent in the first quarter of this year compared with the previous three months, and is now 0.7 per cent above its pre-pandemic (last quarter of 2019) level.

"Growing the economy is one of the best ways to help with the cost of living and that's why I'm pleased today's figures show the UK economy is continuing to grow," Chancellor of the Exchequer Rishi Sunak said in a tweet late Thursday.

"The economy is now bigger than it was before Covid hit, and growing faster than the US, Germany, France and Italy," he wrote.

But economists remain cautious. March's GDP figures show that economic growth has slowed down and people had begun to cut spending even before the large energy cap rise in April.

The country's 30-year-high 7 per cent March inflation rate is likely to keep rising this year.

The Bank of England (BoE) projected inflation to rise further to 9 percent in the second quarter due to the energy price cap rise in April, and then peak at "slightly over 10 per cent" in the last quarter as the energy price cap is likely to be increased again in October.