The British economy unexpectedly halted in February due to strikes that damaged public services, but it is still anticipated to do better than the BoE predicted.

The British economy unexpectedly halted in February due to strikes that damaged public services, but it is still anticipated to do better than the Bank of England predicted.

The Office for National Statistics said Thursday that GDP was flat from January, rather than increasing by 0.1% as projected. The January number was revised upward to 0.4%.

The findings raise output in the UK above its pre-pandemic level, indicating that the economy isn't likely to contract in the first quarter. This minimises the likelihood of a recession even more, but sets the UK up for a protracted period of instability.

The economy probably gained 0.1% in the first quarter assuming no adjustments, according to the ONS, unless the March report indicates a fall of more than 0.2%.

A 0.6% decline would be necessary for GDP to fall 0.1% on the quarter, as predicted by the BoE. That would be a greater drop compared to December, when consumer attitude was worse, and when the country lost the most days since 2011 which was caused by striking.

The lack of growth is "bad news" for the UK, according to George Lagarias, chief economist at accounting company Mazars.

"Growth in the UK is stagnating and has fallen behind its developed market peers," he added. "We expect the UK to continue to underperform the other G-7 economies for the foreseeable future, but we acknowledge that the short-term global economic outlook has materially improved in recent months."

The impact of significant industrial action during the month is reflected in the poor February results. Service production declined 0.1% as a result of teacher and public servant walkouts. Manufacturing, which experts expected to rise somewhat, likewise recorded no movement in the month.

Strikes grew in intensity throughout the month, with schools in England launching a national walkout on Feb. 1 in a salary dispute, as well as local strikes on days that followed. Rail workers, university employees, nurses, paramedics, and public personnel were all participating in the strike.

February was also oddly warm, limiting utility output.

Regardless of the decline in the services sector, consumer-facing services climbed by 0.4% in February, led by retail, which rose at the quickest pace since October. Although consumer-facing services are still 8.9% lower than they were before the pandemic, whereas other services have recovered losses to be up 2.2%.

According to Yael Selfin, chief economist at KPMG UK, a mix of positive GDP revisions and improved global economic circumstances could potentially assist the UK economy escape a recession this year.

(bloomberg.com, bbcnews.co.uk)