There is significant uncertainty ahead for the UK economy, according to Chancellor Rishi Sunak.
The Chancellor warned of uncertainty following Russia’s invasion of Ukraine.
His warning comes despite a healthy set of economic figures in January, with the UK economy growing by 0.8% after its 0.2% decline in December.
The UK economy bounced back in January as Covid concerns started to ease.
However, the British Chambers of Commerce is warning we might face a recession in the UK due to the Russian invasion of Ukraine and its impact on prices.
Before Russian launched its military action in Ukraine, UK households already faced sharply rising prices, with more to come next month when National Insurance tax rates are hiked along with council tax and energy bills.
Suren Thiru, head of economics at the British Chambers of Commerce, said:
“Russia’s invasion of Ukraine has increased the risk of a recession in the UK by exacerbating the already acute inflationary squeeze on consumers and businesses and derailing the supply of critical commodities to many sectors of the economy.”
Looking back at January’s economic growth, the recovery came from wholesaling, retailing, restaurants and takeaways, according to the Office for National Statistics (ONS).
However, the global supply chain crisis continues to hamper recovery in some sectors.
Darren Morgan, director of economic statistics at the ONS, said:
“GDP bounced back from the hit it took in December due to the Omicron wave and is now 0.8% above its pre-pandemic peak.
“All sectors grew in January with some industries that were hit particularly hard in December now performing well.”
Responding to the latest official figures, the Chancellor said Russia’s invasion of Ukraine is creating “significant economic uncertainty”, but “it is vital that we stand with the people of Ukraine to uphold our shared values of freedom and democracy and ensure Putin fails”.
The Chancellor also said the government had provided “unprecedented support” throughout the pandemic, “which has put our economy in a strong position to deal with current cost of living challenges.”