How have the strikes affected the UK economy?

Labor strikes had a noticeable but limited impact on economic growth in 2022 as lost working days hit a 34-year high, but further strikes will weigh more heavily on the UK this year.

Data from the Office for National Statistics last week showed that UK GDP was flat in the last quarter of last year, narrowly avoiding a technical recession, which Chancellor Jeremy Hunt says ‘shows that our economy is more resilient than many feared’.

Britain lost nearly 2.5 million working days to union action in 2023, the highest number since 1989, when 4.1 million were lost, with 843,000 days lost in December alone, separate ONS data said on Tuesday.

The chancellor warned “we are not out of the woods yet” after GDP growth slowed by 0.5 percent from November to December amid mounting industrial action.

Analysts at ING said: “Most, if not all, of that 0.5 percent contraction can be attributed to strikes (transport and health were both heavy constraints) or a lack of Premier League football matches in December due to the World Cup.”

Economic growth will level off in the fourth quarter of 2022

Luke Newman, UK equities portfolio manager at Janus Henderson Investors, echoed the Chancellor’s comments on the resilience of the economy, noting that if the data were adjusted for union action, it “would actually point to some underlying economic growth during the quarter.”

For its part, the ONS said it had only seen “anecdotal evidence” suggesting rail and postal strikes during the quarter had hurt businesses “across a wide range of industries.”

While the direct impact of industrial action “can be seen in the rail transport and postal and courier sectors,” the ONS warned it “cannot isolate the impact of these strikes from other factors in the wider economy.”

Railway strikes mainly affected restaurants, caterers, hotels and bars, the ONS noted, but other sectors affected include “those involved in jewelry manufacturing, food wholesale, beauty treatment and wine wholesale.”

At the beginning of 2023, listed companies have already warned investors about the impact of strike action.

City Pub Group said strikes would cost it £750,000 in revenue, with Fuller, Smith & Turner and Revolution Bars also warning of the financial fallout.

The impact was not limited to pubs, however, as WH Smith and Magners cider maker C&C Group also warned investors.

Others, however, have been more resilient, with well-known high street heroes Greggs, Next and M&S all shrugging off the impact of strikes.

The ONS emphasized the downsizing of human health and social work activities, where strikes weighed in

With regard to postal strikes, the ONS highlighted “companies involved in financial planning, hospitality, computer repair and management consulting” as among those hardest hit.

It added: ‘Other units affected include those involved in the manufacture of metal doors and windows, blankets and jewelery and the wholesale trade of flowers, watches, garden furniture, computer equipment, optical equipment, motor vehicle parts and household goods. ‘

At the center of the postal strikes, Royal Mail recently warned that union action will cost the group £200 million, leaving the group with a heavy loss.

However, strike action was not limited to postal and railway services. Doctors, nurses, paramedics, university employees, civil servants and teachers are among the groups also lining up to demand better wages and working conditions.

The service sectors shrank by 0.8 percent in the quarter, a drop mainly driven by a 2.8 percent drop in ‘human health and social work’.

The ONS said: ‘This was driven by a 4.2 percent drop in the human health activities sector, which saw broad industry-wide declines.

‘This also included fewer GP appointments and operations, partly due to the impact of strikes.’

Strikes will continue across the country in the coming months, putting the brakes on the UK economy as it fights the recession.

This week alone will see union action from Unite workers at drinks giant Diageo, as well as staff from the Department of Work and Pensions, UK museums and Border Force.

This week will be a busy week for union actions

Strike plans continue into March with workers across the economy