UK GDP rose by 0.1% in February, indicating serious trouble for the nation’s economic prospects moving into the post-Covid era.
A series of knock-on effects from Russia’s invasion of Ukraine and supply chain issues have sent production costs skyrocketing, with the prices of crucial metals and chips in the technology sector hammering the production sector.
The economy subsequently fell back on the weakened services sector for a sense of optimism, which grew by 0.2% and helped increase real GDP to 1.5% above its level before Covid-19. However, the result has not brought entirely good news for the country.
“This is a good sign for the economy but was slightly offset by production, which fell by 0.6% and construction, which fell by 0.1%. While rising inflation continues to be a significant risk, today’s data could provide another sign to the BOE to take further action,” said XTB chief market analyst Walid Koudmani.
AJ Bell financial analyst Danni Hewson. added: “A downbeat production sector means a greater reliance on services for growth and with the cost-of-living crisis only just really baring its teeth there is concern that this month’s anaemic growth might be as good as it gets for a while.”
Analysts blamed bad weather for keeping consumers indoors, with high street proprietors from all walks of business suffering from the customer shortage.
Staff sickness from Covid-19 crippled the workforce, and despite a rise in the travel sector as people sought sunshine and an escape from the storms, chaos hit the major airlines including EasyJet and British Airways as hundreds of flights were cancelled last-minute following a wave of Covid-19 alerts.
“The awful weather was also responsible for one of the month’s bright spots as Brits rushed to finally book their ticket to some sunshine as travel restrictions were put to bed,” said Hewson.
“Travel agents enjoyed a surge in demand, though many of those that did make bookings may have found themselves caught up in the getaway chaos that’s been making headlines over the last couple of weeks.”
However, small hoteliers and B&Bs enjoyed a surge in business despite the travel disruptions as the UK began to enjoy life after lockdown in the steady return to business as usual for the country.
The slow UK GDP growth in February has proven worrying to financial experts, and the next few months will prove essential to track the UK’s progress moving into the post-Covid age.