UPDATED: UK ECONOMY ENTERS RECESSION
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UK economy has entered recession after recording two successive quarters of negative economic growth in the second half of last year, official data showed on Thursday.
Gross domestic product shrank by 0.3 per cent in the fourth quarter of 2023 after contracting 0.1 per cent in the previous three months, the Office for National Statistics said in a statement, meeting the technical definition of a recession.
Britain slid into recession last year on elevated inflation and a cost-of-living crisis, official data showed Thursday, dealing a blow to Prime Minister Rishi Sunak before this year’s general election.
Gross domestic product shrank 0.3 per cent in the fourth quarter of 2023 after contracting 0.1 per cent in the prior three months, the Office for National Statistics (ONS) said in a statement.
That places the economy in recession, which is defined as two successive quarters of falling GDP.
The ONS noted that all main sectors shrank in the fourth quarter – with manufacturing, construction and wholesale being the biggest drags on growth – but added the economy was broadly flat overall in 2023.
Sunak, whose governing Conservatives are trailing Keir Starmer’s main opposition Labour Party ahead of the election due this year, has pledged to grow the economy as one of his top five priorities.
News of the recession comes as voters go to the polls in two by-elections on Thursday, with the Conservatives fearful of losing one-time strongholds in Wellingborough, central England, and Kingswood in the southwest.
– ‘Mild recession’ –
“The news that the UK slipped into technical recession in 2023, will be a blow for the prime minister on a day when he faces the prospect of losing two by-elections,” said Capital Economics analyst Ruth Gregory.
“But this recession is as mild as they come and timely indicators suggest it is already nearing an end.”
Finance minister Jeremy Hunt noted that stubborn inflation and high interest rates were behind the output fall – but insisted the economy was “turning a corner”.
“While interest rates are high – so the Bank of England can bring inflation down – low growth is not a surprise.
“But there are signs the British economy is turning a corner; forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low.
“Although times are still tough for many families, we must stick to the plan – cutting taxes on work and business to build a stronger economy.”
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