U.K. GDP growth was flat in February, below consensus estimates and down from January figures, as worker strikes weighed on output.
Teachers, civil servants and rail workers took part in industrial strike action throughout February, contributing to the lack of growth over the month, money managers said.
February's zero growth followed 0.4% growth in January and was also below consensus estimates of 0.1% growth for the month.
Despite the lack of growth, money managers said the U.K. is increasingly likely to avoid a technical recession, and they still expect the Bank of England to again raise interest rates at its next meeting in May.
"Industrial action across sectors was a considerable drag on growth but despite this, growth is just about holding up," said Modupe Adegbembo, G7 economist at AXA Investment Managers, in a statement. "We think it is increasingly possible that the U.K. will avoid entering a technical recession, but underlying growth momentum remains weak as inflation and the lagged impact of rising rates continue to weigh on the economy and we expect growth to continue to move sideways rather than rebound meaningfully," she said.
The manager expects the BOE to hike rates by a further 25 basis points, bringing the U.K.'s rate to 4.5%. AXA executives then expect the bank to hit pause on its rate hikes, before cutting rates starting in the fourth quarter until it reaches 3.25% at the end of 2024.
Melanie Baker, senior economist at Royal London Asset Management, said in a separate statement that the risk of the U.K. recording a negative quarter of GDP growth in Q1 "now looks limited," but said she does expect the economy to "slip into a modest technical recession this year at some point."
Industrial strike action is set to continue through April, having also taken place in March. Charles Hepworth, investment director at GAM Investments, said in a statement: "Therefore, we are likely to continue to see the depressive effect on any growth."
The announcement of zero growth followed the International Monetary Forum's latest World Economic Outlook, which forecast U.K. GDP growth at the worst of all economies it covers.
In its latest report, published Tuesday, the IMF said it forecasts a GDP growth contraction of 0.3% for the U.K. in 2023, although growth is the expected to rebound to 1% in 2024. However, that 2023 estimate was revised upward from a -0.6% GDP growth forecast, made by the IMF in January.