Jeremy Hunt insists outlook bright after economy flatlines in February

GDP grew by a negligible 0.02% in February, after growing by 0.1% in the preceding quarter.

There was growth in the construction sector thanks to mild weather, new work and repairs, but this was offset by a decline in the services sector.

Walk-outs by teachers and civil servants were also a significant drag on growth.

The ONS also reported the UK’s consumer prices index (CPI) inflation rate rose to 10.4% in February, despite Bank of England efforts to return it to its 2% target.

The IMF this week predicted the UK would be one of the world’s worst performing major economies this year, with an overall 0.3% drop in GDP before a 1% rise in 2024.

The Chancellor highlighted the small quarterly increase in growth while skating over February’s dead zone.

Mr Hunt said: “The economic outlook is looking brighter than expected - GDP grew in the three months to February and we are set to avoid recession thanks to the steps we have taken through a massive package of cost of living support for families and radical reforms to boost the jobs market and business investment.”

The Treasury said that after avoiding recession in 2022, it was also due to dodge it this year.

But shadow chancellor Rachel Reeves said growth was “on the floor”.

She said: “The reality of growth inching along is families worse off, high streets in decline and a weaker economy that leaves us vulnerable to shocks.”

Green MSP Maggie Chapman added: "The Tories are completely failing to deliver an economy that supports communities across the country.

"Their model of the economy is clearly failing. The obsession with growth is not delivering for people across Scotland. Trickle-down economics does not work. They are out of ideas and clearly cannot be trusted with our economy.

"It's not good enough. Our economy has to work for people and planet."

The British Chambers of Commerce (BCC) said growth remains “stubbornly low” despite the UK managing to avoid a technical recession of two consecutive quarters of falling GDP.

BCC head of research David Bharier said: “The Government has not addressed some of the major issues holding firms back, such as the unprecedented energy price shock and record tightness in the labour market.”

ONS director of economic statistics Darren Morgan added: “The economy saw no growth in February overall. Construction grew strongly after a poor January, with increased repair work taking place. 

“There was also a boost from retailing, with many shops having a buoyant month. These were offset by the effects of Civil Service and teachers’ strike action, which impacted the public sector, and unseasonably mild weather led to falls in the use of electricity and gas.”

Tens of thousands of school teachers who are members of the National Education Union went on strike on February 1, affecting the majority of schools in England and Wales.

It marked the biggest strike day in a decade, with members of seven trade unions taking action, affecting universities, trains and buses, as well as work done by civil servants.

The Trades Union Congress criticised the Prime Minister, Rishi Sunak, for holding back growth by not pushing through pay rises for public sector workers.

TUC general secretary Paul Nowak said: “Sunak and his ministers have sucked the life out of the economy by holding down the pay of millions of workers.

“Everyone’s cutting back their spending, so businesses are taking a hit too.”

Julian Jessop of the free market Institute of Economic Affairs said: “Early evidence suggests that the economy grew again in March and in the first quarter as a whole, probably by around 0.2-0.3%. Nonetheless, that would be little to cheer. 

“Simply beating the gloomy forecasts of organisations like the IMF is a pretty low bar. 

“The UK economy risks being kept in the slow lane by a combination of high tax and spend policies, dysfunctional energy and housing markets, and a pervasive belief that the ‘government always knows best’.”