The bad omens have come true. The UK ended 2023 with a feeling it would enter a recession, and this Thursday the statistics confirmed that. The British economy declined by 0.3% in the last quarter of the previous year. Since this data is bad after the 0.1% decline recorded between last July and September, the country has entered a technical recession. Two consecutive quarters with a negative balance, as defined by experts. Conservative Prime Minister Rishi Sunak, facing an election year with opinion polls against him, has based his entire political strategy on a rebound in economic activity.
High interest rates and rising costs of living have slowed consumption by British citizens. This was the culmination of a general decline in all sectors of the economy. “All major sectors have fallen in [último] a fourth. The Director of Economic Statistics at the United Nations Office for National Statistics explained that industrial production, construction and wholesale sales saw the largest declines, which were partially offset by an increase in hotel activity and rental of vehicles and heavy machinery. kingdom.
Rating agency Fitch issued a report this week expressing its concern about the country's financial development, with an estimated deficit of about 6% of GDP in 2023. The agency is confident that the March budget of this year, which the Sunak government must present, will help correct the imbalance. However, it indicates in its report the possibility of downgrading the UK rating (AA-), which the United Kingdom currently enjoys.
Rishi Sunak's promise to grow the economy has been shattered. “The Prime Minister no longer has the credibility to ensure that his recovery plan succeeds and that he turns things around after fourteen years of Conservative decline,” denounced Rachel Reeves, Labour’s economics spokeswoman and, if the polls are correct, future minister. He predicted, “This is the recession that Sunak is suffering from, and the news will plunge families and businesses in the United Kingdom into deep anxiety.”
The British government is committed to reducing inflation, which currently stands at 4%, after it reached double digits a little more than a year ago. Downing Street and analysts expect the Bank of England to begin easing monetary policy. Currently, the interest rate is 5.25%. Bank of England Governor Andrew Bailey has already expressed confidence that the British economy will see slight improvement throughout 2024.
The weak data known so far, coupled with inflation that remains more than a point higher than its eurozone counterpart, and a continuing cycle of strikes in the public sector, prompts many analysts to define the development as flat, or very weak. The country, during a year in which the conservative government needs more than a few tenths to change the general climate of pessimism.
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