Economy United kingdom The Office for National Statistics (ONS) said it contracted in the fourth quarter of 2023 for the second time in a row, meaning the country entered a recession.
Britain’s gross domestic product fell by 0.3% in the fourth quarter of last year, after falling by 0.1% in the third quarter, according to a statement from the Office for National Statistics.
High interest rates and inflation have put pressure on households and businesses, making it harder for the Conservatives in power in the middle of an election year.
Economists often consider two consecutive quarters of economic contraction to be the definition of a “technical” recession.
However, in 2023 as a whole, the UK continues to show slight growth of 0.1% year-on-year, after growth of 4.3% in 2022, the Office for National Statistics said.
The main reason for the slump was weak business results in December, in the middle of the Christmas season which is traditionally the busiest time of year for the sector, according to the Office for National Statistics.
thus, The British economy is entering a recession for the first time since 2020, when lockdown measures to combat the coronavirus pandemic affected economic activity for months.
The Office for National Statistics says the UK economy is “on track for its worst performance since the 2009 crisis, barring 2020.”
“Inflation is the biggest obstacle to growth, so halving it was our priority,” said Chancellor of the Exchequer Jeremy Hunt.
UK inflation is running at 4%, double the Bank of England’s target but down from 11% in October 2022.
“With interest rates – currently 5.25% – being raised by the Bank of England to bring down inflation, weak growth is not surprising,” Hunt continued.
“But there are signs that the British economy has passed a difficult stage, and expectations speak of growth in the coming years,” the minister said.
Economists are underestimating the size of this recession.
“It is moderate and leading indicators suggest it is already nearing its end,” said Ruth Gregory, economist at Capital Economics, in a statement.
But Gregory explained that “announcing that the UK will enter a technical recession in 2023 would be a blow to Conservative Prime Minister Rishi Sunak.”
The Labour Party currently enjoys a clear lead in opinion polls over the Conservative Party, which has ruled the country for about 14 years, ahead of this year’s election, the date of which has not yet been set.
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