UK HOPEFUL OF ECONOMIC REBOUND AFTER DATA REVEALOn March 13, 2023 by Sahiba Chopra
Rishi Sunak is optimistic about the UK’s economy coming back on track after official figures revealed that the UK’s economy crossed the expected growth rate for the month of January 2023.
The Prime Minister asserted that the revealed data confirms the righteousness of the government’s plan and emphasized sticking to it. As per the official data, the UK’s economy expanded by 0.3% in the month of January, thereby recovering from a drastic fall in December 2022.
The revealed data is good news for the current regime as very soon the budget would be announced by Jeremy Hunt, the Chancellor of the Exchequer.
FACTORS BEHIND THE POSITIVE FIGURES
Multiple factors operated behind the January 2023 positive economic figures. The Office for National Statistics (ONS) in the UK is the body behind the collection and publication of data. Darren Morgan from the ONS throws light on what caused the economy to make a rebound in January. He explains that the economy got a major boost from higher attendance in schools and the return of Premier League Football.
January 2023, he explains, was a strong month for private health providers as well as for postal services, which recovered partially from the impacts of strikes in December. In December 2022, the education sector in the UK witnessed a fall of 2.6%.
In January 2023, the sector recovered and grew by 2.5%. This happened since children returned to schools after recovering from flu and covid-19. When the output of the education sector increases, an evident positive result can be seen in the economy. The UK’s economy in January 2023 witnessed growth in the arts and recreation sectors too due to the return of Premier League Football, thereby giving a much-needed boost to the economy.
ALL’S NOT WELL WITH THE MANUFACTURING SECTOR
Though the data bought some respite for the UK, the data about the output is not optimistic. The output data for the manufacturing, as well as construction sectors, show a downfall, which points towards the fact that the economy of the UK is still fragile.
While many experts believe that the recession situation can now be avoided in the UK, there are certain economists like Ruth Gregory, deputy chief UK economist at Capital Economics, who opine that underneath the economy of the UK, there is weak ground.
Further, she highlights that last month i.e., in February many nurses, teachers, and ambulance workers along with many working in the rail industry gave up their jobs. Based on these factors, she is doubtful of a strong future economic performance and expresses her concern regarding the possibility of the UK plunging into recession.
CHEERFUL GOLDMAN SACHS
Contrary to economists like Ruth Gregory, there are economists like Goldman Sachs, an investment banker, optimistic about the UK’s economy. Goldman Sachs has predicted that the UK would be able to avoid a downturn.
A continuous period of two to three months during which an economy shrinks is termed a recession. The UK’s economic growth from October- December 2022 was flat, Goldman Sachs has predicted that for the first three months of 2023 too, the growth would remain flat.
Currently, the UK is grappling with a myriad of problems, the major one being the high inflation rate leading to a high cost of living. Even though wholesale gas prices have started to come down, the inflation rate in the UK is at a forty-year high.
To curb inflation, the Bank of England has spiked the interest rates to 4%, the highest since 2008. Although some savers might benefit from increased interest rates, pressure on mortgage holders has been increased. The January 2023 official data has ignited hope of an economic rebound for Britons. It would be worth observing how their hopes are met in the upcoming budget announcement.
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