According to recent data, the UK narrowly avoided entering a recession in 2022 despite the economy growing nothing between October and December.
Despite a steep 0.5% decline in economic output in December, which was partially caused by strikes in the health, transportation, and postal services, this is still the case.
Chancellor Jeremy Hunt said the figures show “underlying resilience” but said “we are not out of the woods”.
The Bank of England still expects the UK to enter recession this year.
But it will be shorter and less severe than previously thought.
Mr Hunt said that high inflation remains a problem and continues to cause “pain for families up and down the country”.
Inflation – or the rate at which prices are rising – is slowing but at 10.5% remains close to a 40-year high.
The Office for National Statistics, which released the data, claimed that the last three months of 2022 saw no economic growth.
Additionally, it updated its data for July and September to show that the GDP contracted by 0.2% rather than the 0.3% previously predicted.
When the economy shrinks for two consecutive three-month periods, it is considered to be in a recession.
But December’s numbers came in worse than anticipated.
Darren Morgan from the ONS said there was a fall in health services with fewer operations and GP visits. He also said that sporting activities, particularly football, were impacted because of the World Cup.
He people were not “able to enjoy top flight football due to the absence of Premier League football until Boxing Day, as the World Cup continued”.
“And finally rail and postal industries had a poor month. We certainly saw the impact of strikes as both fell heavily in December,” he said.
Strike action on trains caused disruption on the railways and on the roads in December. Postal workers also went on strike on a series of days in the run-up to Christmas.
Over 2022, gross domestic product (GDP) grew by 4% – the biggest increase of all G7 nations for last year.
However that compares to 7.6% growth in the previous year and the UK economy is still 0.8% smaller than it was before the Covid pandemic.
Rachel Reeves, Labour’s shadow chancellor, said the latest figures show the economy “is stuck in the slow lane”.
She added: “We must bring in urgent measures to prevent yet more harm from the cost of living crisis, using a proper windfall tax on oil and gas giants to stop the energy price cap going up in April so that people have more money in their pockets.”
Liberal Democrat MP Sarah Olney, said: “Britain is dangling on over the edge of a recession after months of economic vandalism and chaos in Government.
“The blame for these gloomy figures lies squarely with the government, who have botched budgets, failed to tackle inflation and have no plan for growth.”