Industrial action had a noticeable but limited impact on economic growth in 2022, as lost working days hit a 34-year high, but further strikes are set to weigh more heavily on the UK this year.
Office for National Statistics data last week showed UK GDP was flat in the final quarter of last year, narrowly avoiding a technical recession, which Chancellor Jeremy Hunt said ‘shows our economy is more resilient than many feared’.
Britain lost almost 2.5 million working days to industrial action in 2023, the highest since 1989 when 4.1 million days were lost, with 843,000 days lost in December alone, separate ONS data said on Tuesday.
The Chancellor has warned ‘we are not out of the woods yet’, after GDP growth slipped 0.5 per cent from November to December, as industrial action intensified.
Analysts at ING said: ‘Most, if not all, of that 0.5 per cent contraction can be blamed on either strikes (transport & health were both heavy drags) or a lack of Premier League football games in December due to the World Cup.’
Union members across the country are taking to picket lines to demand better pay and working conditions
Economic growth flatlined in Q4 2022
UK equities portfolio manager at Janus Henderson Investors Luke Newman echoed the Chancellor’s comments on the economy’s resilience, noting that if the data is adjusted for industrial action it ‘would actually suggest some underlying economic growth over the quarter’.
For its part, the ONS said it had only seen ‘anecdotal evidence’ to suggest rail and postal strikes had hurt businesses ‘across a wide range of industries’ over the quarter.
However, while the direct impact of industrial action ‘can be seen in the rail transport and postal and courier activities industries’, the ONS cautioned it is ‘not able to isolate the impact of these strikes from other factors across the wider economy’.
Rail strikes primarily impacted restaurants, caterers, hotels and bars, the ONS found, but other affected industries include ‘those engaged in the manufacture of jewellery, the wholesale of food, beauty treatments and the wholesale of wine’.
The start of 2023 has already seen stock market-listed firms alerting investors to the impact of strike action.
City Pub Group said strikes would cost it £750,000 in revenues, while Fuller, Smith & Turner and Revolution Bars also warned of the financial impact.
The impact was not limited to pubs, however, with WH Smith and Magners cider maker C&C Group also warning investors.
However, others were more resilient, with high street stalwarts Greggs, Next and M&S all shrugging off the impact of strikes.
The ONS highlighted the contraction in human health and social work activities, where strikes weighed
With regard to postal strikes, the ONS highlighted ‘businesses engaged in financial planning, hospitality, computer repair, and management consulting’ as among the worst affected.
It added: ‘Other units affected include those involved in the manufacture of metal doors and windows, blankets and jewellery and the wholesale of flowers, watches, garden furniture, computer equipment, optical equipment, motor vehicle parts, and households’ goods.’
At the centre of the postal strikes, Royal Mail recently warned industrial action will cost the group £200million, pushing the group to a heavy loss.
Strike action, however, has not been limited to postal and rail services. Doctors, nurses, paramedics, university workers, civil servants and teachers are among the groups also taking to picket lines to demand better pay and working conditions.
The services sectors contracted 0.8 per cent during the quarter, a decline primarily driven by a 2.8 per cent fall within ‘human health and social work activities’.
The ONS said: ‘This was driven by a 4.2 per cent fall in the human health activities industry, which saw broad falls across the industry.
‘This included fewer GP appointments and operations, partly because of the impact of strikes.’
Strike action is set to continue across the country over the coming months, which will act as a drag on the UK economy as it fights against recession.
This week alone will include industrial action from Unite workers at drinks giant Diageo, as well as staff at the Department of Work and Pensions, British museums and Border Force.
This week is set to be a busy week for industrial action
Strike plans continue into March with workers across the economy
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