© Reuters. FILE PHOTO: People walk and stand by the temporary fencing around the perimeter of Trafalgar Square, to prevent crowds gathering on New Year’s Eve, in London, Britain, December 31, 2021. REUTERS/May James
LONDON (Reuters) -Britain’s economy shrank by 0.1% in March but expanded by 0.8% for the first quarter of 2022 as a whole, official figures showed on Thursday in what is likely to have been a high point for 2022 as the cost of living crisis increasingly bites.
Economists polled by Reuters had on average expected gross domestic product (GDP) to be flat in March and to have grown 1.0% over the first three months of this year, compared with the final quarter of 2021.
The fall in GDP was led by a 0.2% fall in output from Britain’s dominant services sector.
Britain’s economy shrank by a historic 9.3% in 2020 and grew by 7.4% in 2021, the sharpest swing in output of any G7 economy during the COVID-19 pandemic.
Overall GDP, on a monthly basis is now 1.2% above its pre-COVID level in February 2020.
However economists see Britain at a growing risk of slipping back into recession, as the war in Ukraine exacerbates existing post-pandemic pressures, which the Bank of England has forecast will push inflation above 10% by the end of this year.
Prime Minister Boris Johnson’s government is under political pressure to provide more support to households to tackle soaring bills for energy and other essentials which have already caused a near-record fall in consumer sentiment.
On Wednesday, Britain’s National Institute of Economic and Social Research (NIESR), a think-tank, forecast British GDP would fall in the third and fourth quarters of this year, meeting the technical definition of a recession.
Last month the International Monetary Fund predicted Britain would see the weakest growth and highest inflation of any major advanced economy next year.