UK growth slowed more than expected in February amid slumping car manufacturing, despite a strong recovery in overseas holiday bookings after Covid restrictions eased.
the Office of National Statistics said gross domestic product rose just 0.1% in February, compared to a monthly growth rate of 0.8% in January when the economy was recovering from the Omicron variant of the coronavirus.
City economists had forecast a monthly growth rate of 0.3%. Overall, the economy was 1.5% higher than its pre-pandemic level in February.
Raising questions about the strength of the economy ahead of Russia’s invasion of Ukraine in late February, manufacturing slumped as automakers continued to struggle to source parts amid market disruptions. global supply chain and shortage of vital components.
Activity in the sector fell by 0.4% over the month, driven by a drop of 5.4% in the manufacture of transport equipment and a drop of 4.3% in computer, electronic and optical products where the Disruption in microchip availability has affected production volumes worldwide.
Tourism rose sharply after the easing of pandemic restrictions led to an increase in the number of people booking holidays in the UK and abroad, with travel agencies growing 33.1% and tour operators. Hotels saw a 23% increase in business as more people traveled across the UK, contributing to the first month of positive growth for hotels and campsites since August.
However, growth in the economy’s service sector slowed amid a decline in the health sector, largely reflecting a setback from the high levels of NHS test and trace and vaccination programs in December. and January, when Omicron was at its peak.
Some businesses said disruption from storms Dudley, Eunice and Franklin during the month hampered trade, including in the construction industry, restaurants and takeaways, hairdressing and beauty and beauty parks. recreation and holiday centers. Some businesses have reported a positive impact, such as those from fencing, torch sales, and temporary off-grid power.
Business leaders have warned that the economy is likely to struggle in the coming months as soaring inflation hurts consumers’ purchasing power.
Suren Thiru, head of economics at the UK Chambers of Commerce, said the government needed to provide more financial support to businesses and businesses to cope with mounting cost pressure.
“The February slowdown will likely mark the start of a prolonged period of significantly weaker growth as rising inflation, rising energy bills and rising taxes increasingly hurt key drivers of output. UK, including consumer spending and business investment,” he said.