According to official numbers released on Thursday, the British economy entered a recession at the end of 2023 for the first time since the coronavirus epidemic began, with output declining more than expected in the last three months of the year.
According to the Office for National Statistics, the gross domestic product of the United Kingdom decreased by 0.3% in the last quarter of the year, marking the second consecutive quarter of fall. Two consecutive quarters of negative growth are often regarded as a technical recession. However, the term is not officially defined.
A consensus estimate of -0.1% for the October to December period was generated by Reuters polling economists. The fourth quarter saw contractions in all three of the major economic sectors, with the ONS reporting drops in services output of 0.2%, manufacturing output of 1%, and construction output of 1.3%.
The British GDP is predicted to have grown by just 0.1% in total in 2023 compared to 2022. The production decreased by 0.1% in December.
UK Finance Minister Jeremy Hunt said high inflation is still "the single biggest barrier to growth." It forces the Bank of England to maintain stable interest rates. This impedes economic progress.
"However, there are indications that the British economy is turning the corner; experts concur that growth will pick up steam in the coming years, wages are increasing more quickly than prices, mortgage rates are declining, and unemployment is still low," he continued.
Although it has significantly decreased, inflation in the UK is still far higher than that of its economic counterparts and the Bank of England's 2% objective, which puts pressure on household budgets. The headline consumer price index reading was 4% higher in January than the previous year.
Interestingly, GDP per capita, which accounts for population growth, declined by 0.6% in the fourth quarter of last year following a 0.4% fall in the preceding three months. This loss continued through all four quarters of the previous year. Seasonally adjusted GDP per person decreased by 0.7% in 2023.
Labour attacked the government's handling of the economy in response to Thursday's statistics. The party's finance spokesperson, Rachel Reeves, stated, "This is Rishi Sunak's recession and the news will be deeply worrying for families and businesses across Britain." She added that Sunak's promise to bring about growth was in "tatters."
The biggest cost-of-living crisis in decades and a sharp increase in interest rates that put pressure on borrowers have crippled the UK economy. Another decline in GDP in December was caused by strikes in the rail and healthcare industries as well as a sharp decline in retail sales.
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