The British economy fell into recession in the second half of 2023, a difficult context for the Prime Minister. Rishi SunakWho has promised to boost growth ahead of elections later this year. Gross domestic product shrank by a worse-than-expected 0.3% in the fourth quarter, after shrinking by 0.1% between July and September, according to official data.
the sterling It weakened against the dollar and the euro. Investors increased bets that the Bank of England will cut interest rates this year and companies asked the government for more help in its budget plan due on March 6.
“Companies have already stopped having illusions about the difficulties they face, and this news is undoubtedly It will sound the alarm for the government.Alex Veitch, Director of Policy and Knowledge at the British Chambers of Commerce, said:
Minister of Economy, Jeremy HuntHe said there were “signs that the UK economy is at a turning point” and that “we must stick to the plan: cutting taxes on work and businesses to build a stronger economy.” According to media reports, Hunt intends to cut billions of pounds from public spending plans to fund pre-election tax cuts in his budget, if he faces financial difficulties.
According to the UK Office for National Statistics (ONS), the economy was expected to grow by 0.1% in 2023 compared to 2022. Bank of England He said that Production is expected to recover. Slightly in 2024, but by only 0.25%. The fact is that the British economy has been stagnant for almost two years, although recessions in the country have become less frequent as the economy has grown and matured.
Worst streak recorded since 1955
The COVID-19 pandemic caused the deepest contraction in two quarters in early 2020. Before that, the global financial crisis had caused a severe recession that lasted just over a year, from the second quarter of 2008 to the second quarter of 2009.
Data on Wednesday showed that inflation remained at a lower-than-expected 4% in January, sparking talk among investors about Reduce rate Bank of England for June. But the strong wage growth also recorded on Tuesday shows why the Bank of England remains cautious.
The fourth-quarter GDP drop was the biggest since the first three months of 2021, when Britain imposed new restrictions. Covid-19The Office for National Statistics said economic output fell by 0.1% month-on-month in December after growing by 0.2% in November. It also showed that the manufacturing, construction and wholesale sectors contributed most to the fall in GDP in the final three months of last year.
GDP per capita fell in every quarter last year and has not grown since early 2022, leading to Longest losing streak ever Since the existence of data (1955).
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