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UK economy flat in February despite travel easing

by host

LONDON — The British economy grew by 0.1 percent in February, according to data out Monday from the Office for National Statistics.

Limits on international travel were eased, boosting tourism and services, but production lagged and a decrease in the use of state-run health provisions counteracted the gains, according to the ONS.

“The economy was little changed in February with the easing of restrictions for overseas travel,” Darren Morgan, the director of economic statistics at the ONS, said in a statement.

Growth in international travel and hotels bookings “was partially offset by the reduction of the Test and Trace and vaccination programmes, which made a strong contribution to GDP at the start of the year,” while “manufacturing fell notably” due to continuing supply chain disruptions. Gross domestic product was 1.5 percent above pre-pandemic level, Morgan said.

The disappointing numbers set the stage for a potential contraction in output later in the year, warned Capital Economics, a consultancy. “The news that the economy was hardly growing at all in February … increases the risk of a contraction in GDP in the coming months as the squeeze on household real incomes intensifies.”

U.K. Chancellor Rishi Sunak responded cautiously, with a media statement saying that although the “positive growth” is “welcome,” Russian President Vladimir Putin’s war in Ukraine, which started on February 24, is a cause for further concern.

“Russia’s invasion of Ukraine is creating additional economic uncertainty here in the U.K., but it is right that we are responding robustly against Putin’s unprovoked invasion,” Sunak said.

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