Britain narrowly avoided a recession last year as new data reveals the economy was in more robust shape than some forecasters expected, according to the Office for National Statistics (ONS).

However, the economy contracted sharply in December, meaning there was zero growth in the final quarter of 2022 and the country may still tip into recession this year. Services saw 0% growth, production fell 0.2%, while construction saw 0.3% growth.

A country is considered to be in recession if GDP shrinks for two consecutive three-month periods.

GDP in the third quarter (July to September) fell by 0.3%, but there were indications that the final quarter was not as bad some feared. The economy grew by 4% over the year.

“Despite recent squeezes in household incomes, restaurants, bars and travel agents had a strong year,” said the ONS.

Chancellor Jeremy Hunt said: “The fact the UK was the fastest growing economy in the G7 last year, as well as avoiding a recession, shows our economy is more resilient than many feared.

“However, we are not out the woods yet, particularly when it comes to inflation.

“If we stick to our plan to halve inflation this year, we can be confident of having amongst the best prospects for growth of anywhere in Europe.”

Economists remain divided over prospects for this year. The Bank of England, last week, predicted that the UK economy would shrink in each of the four quarters this year.

But earlier this week, the National Institute of Economic and Social Research (NIESR) said it expects the UK to avoid a protracted recession this year.

High inflation means it will still “feel like a recession” at least for seven million of the poorest households, NIESR said.

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