*
UK economy fails to grow as expected in February
*
Strikes hit output in public sector services
*
January GDP growth revised up, meaning Q1 contraction
unlikely
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Longer-term outlook doubtful, IMF picks out UK as laggard
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Construction the main driver of growth in Feb
(Adds comment from economist, background)
By Andy Bruce and William Schomberg
LONDON, April 13 (Reuters) - Britain's economy stagnated
in February as strikes by public workers hit output but a bounce
in January was stronger than first thought, meaning a recession
is a bit less likely to be brewing in early 2023, official data
showed.
Economic output was flat in month-on-month terms in
February, against the consensus forecast for a 0.1% increase in
a Reuters poll of economists.
But the Office for National Statistics (ONS) revised up its
estimate for January's growth to 0.4% from 0.3% - meaning
Britain is likely to avoid the first-quarter contraction that
the Bank of England predicted last month.
The bigger picture remains weak. While sidestepping
recession for the time being, Britain's economy has stagnated
over the last year.
International Monetary Fund projections published this week
showed Britain bottom of the world's major economies in terms of
expected economic growth in 2023, with a 0.3% contraction
pencilled in, equivalent to a 0.7% fall on a per capita basis.
Suren Thiru, economics director at accountancy body ICAEW,
said recession fears would linger as higher taxes and borrowing
costs offset the fall in inflation and government support for
energy bills.
"These figures suggest that the economy has lost momentum as
sky-high inflation and strike action continue to drag on key
drivers of UK GDP, notably services and industrial production,"
Thiru said.
He said the BoE should end its run of interest rate hikes
next month as raising rates would further weaken the country's
growth prospects.
The ONS said the vast services sector contracted by 0.1% in
February, hurt by strikes by teachers and other public sector
workers, but was offset by a surge in the much smaller
construction sector which rebounded from bad weather in January,
the ONS said.
The upward revision to January means the economy would need
to have shrunk by 0.6% in March for the first quarter as a whole
to show a contraction.
Finance minister Jeremy Hunt said the data showed Britain's
economic performance had been stronger than thought.
Thursday's figures showed a 2.4% surge in construction
output - which represents around 6% of the economy - was the
sole driver of economic growth in February.
ONS officials attributed the jump in construction output to
a recovery in February from disruption caused by bad weather in
January, especially in new work, and a surge in maintenance and
repair work.
(Reporting by Andy Bruce
Editing by William Schomberg and Christina Fincher)
