The economy of United Kingdom contracted in the fourth quarter of 2023 for the second consecutive period, meaning that the country has entered recession, the Office for National Statistics (ONS) indicated.
Britain’s gross domestic product (GDP) fell 0.3% in the fourth quarter of last year, after falling 0.1% in the third quarter, according to a statement from the ONS.
High interest rates and inflation have put pressure on the economy of households and businesses, which, in the middle of an election year, complicates the task of the conservatives in power.
Two straight quarters of economic contraction are often considered by economists to be the definition of a “technical” recession.
However, in 2023 as a whole, the United Kingdom continues to show slight growth of 0.1% year-on-year, after growth of 4.3% in 2022, the ONS said.
The recession was caused mainly by poor business results in December, in the middle of the Christmas season and traditionally the busiest time of year for this sector, according to the ONS.
Thus, The British economy enters recession for the first time since 2020, when confinements to combat the coronavirus pandemic affected economic activity for months.
The ONS notes that the British economy “is recording its worst performance since the 2009 crisis, excluding 2020.”
“Inflation is the biggest obstacle to growth, so halving it has been our priority,” said Chancellor of the Exchequer Jeremy Hunt.
Inflation in the United Kingdom stands at 4%, still double the Bank of England’s target, but has fallen from the 11% reached in October 2022.
“With interest rates high – currently 5.25% – for the Bank of England to reduce inflation, the weak growth is not a surprise,” Hunt continued.
“But there are signs that the British economy has turned a corner and the forecasts speak of growth for the coming years,” said the minister.
Economists downplay the scope of this recession.
“It is moderate and leading indicators suggest it is already coming to an end,” said economist Ruth Gregory of Capital Economics in a statement.
But Gregory clarified that “the announcement that the United Kingdom has entered a technical recession in 2023 will be a blow to the conservative prime minister,” Rishi Sunak.
Labor currently has a clear lead in the polls over the Conservatives, in power for about 14 years, ahead of this year’s election, which still has no date.
Source: Ambito
