The United Kingdom entered a recession at the end of 2023

The UK economy contracted in the fourth quarter of 2023 for the second time in a row, meaning the country has entered a recession, the Office for National Statistics (ONS) said on Thursday.

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 the economy of households and businesses, which in the middle of an election year complicates the Conservatives' mission to power.

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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 recession 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. In this way, the British economy enters a recession for the first time since 2020, when general isolation measures to combat the coronavirus pandemic affected economic activity for several months.

The Office for National Statistics indicates that the British economy “is recording its worst performance since the 2009 crisis, not counting 2020.” Treasurer Jeremy Hunt said: “Inflation is the biggest obstacle to growth, so halving it was our priority.”

The UK inflation rate is 4%, which is double the Bank of England's target, but has fallen from the 11% it reached in October 2022. With interest rates rising – 5.25% currently – the Bank of England must reduce inflation, and Hunt continued: “ “Weak growth is not a surprise.”

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The minister said, “But there are indications that the British economy has passed a difficult stage, and expectations speak of growth in the coming years.” Economists underestimate the scope of this recession. “It is moderate and leading indicators indicate that it is already coming to an end,” economist Ruth Gregory of Capital Economics said in a statement. But Gregory explained that “announcing that the United Kingdom will enter a technical recession in 2023 would be a serious blow to Conservative Prime Minister Rishi Sunak.”