Strikes drag UK economic growth to a standstill; mortgage defaults rising as households struggle – as it happened

Latest GDP report shows that civil service and teachers' strikes held back service sector growth, leading to no growth in February

Tom Stevenson, investment director for Personal Investing at Fidelity International, also predicts the UK will suffer a year of stagnation in 2023.... before a modest rebound next year.

He fears the UK is the weak link' among developed economies (as shown by the IMF's latest forecasts, which Jeremy Hunt has vowed to beat).

The British economy failed to grow at all in February, confirming that, while the UK may avoid recession, it is the weak link among the developed world's economies. The UK's growth is slower than in other rich countries and its inflation higher. We face a year of stagnation in 2023 before a modest rebound next year.

Although January's growth was revised up slightly to 0.4%, February's flat line reflects the impact of the UK's winter of discontent. Strike action took the shine off a modest increase in retail sales, while falling production in the month offset better construction activity.

A combination of upward revisions in GDP data and an improvement in global economic conditions could help the UK economy avoid a recession this year. While this will provide relief for policymakers, the outlook for growth in the medium-term remains relatively weak by historical standards.

Economic activity will remain subdued in the near term as households continue to be squeezed by elevated prices and the cumulative impact of past interest rate increases. Although business sentiment continues to improve, bolstered in part by the fall in wholesale energy prices, we expect investment to be constrained this year amidst the tightening in credit conditions and uncertainty about future policy direction.