UK economy avoids recession after growing in Q4 – ONS

LONDON (Reuters) – Britains economy grew in the fourth quarter of last year, official data showed on Friday, with a jump of business at travel agents and state support for soaring energy bills helping the country to avoided falling into recession.

Economic output increased by 0.1% in the October-to-December period from the previous three months after shrinking by 0.1% in the third quarter, a smaller contraction that previously thought.

The Office for National Statistics had previously said the economy showed no growth in the fourth quarter of 2022.

“The economy performed a little more strongly in the latter half of last year than previously estimated, with later data showing telecommunications, construction and manufacturing all faring better than initially thought in the latest quarter,” ONS statistician Darren Morgan said.

Britains dominant services sector rose by 0.1%, boosted by a nearly 11% jump for travel agents.

Manufacturing grew by 0.5%, driven by the often erratic pharmaceutical sector, and construction grew by 1.3%.

Household savings increased, boosted by the governments energy bill support scheme with the saving ratio rising to 9.3% of disposable income, compared with its level of 5.6%immediately before the pandemic.

Households disposable income increased by 1.3% after four consecutive quarters of negative growth.

The International Monetary Fund said in January that Britain was on course to be the only Group of Seven major advanced economy that will shrink in 2023 although since then economic data has come in stronger than expected by analysts.

The ONS said business investment fell 0.2% in quarterly terms, compared with a first estimate of a 4.8% rise.

The ONS said changes to the way it calculates seasonal adjustments to the data were behind the big revision.

Finance minister Jeremy Hunt earlier this month announced new incentives designed to encourage companies to invest although the tax breaks were less generous than a previous scheme and came just as corporate tax is due to jump in April.

The ONS said British economic output in Q4 was 0.6% below its level of late 2019, the only G7 economy not to have recovered from the COVID-19 pandemic.

(Reporting by William Schomberg; editing by William James and Andy Bruce)