UK economy enters recession

Date:

Britain sank into recession at the end of last year on high inflation and a cost-of-living crisis, dealing a blow to Prime Minister Rishi Sunak before this year’s election.

Gross domestic product shrank 0.3 percent in the fourth quarter of 2023 after contracting 0.1 percent in the prior three months, the Office for National Statistics (ONS) said in a statement.

That places the economy in recession, which is defined as two successive quarters of falling GDP.

The news delivers a major blow to Sunak, who has vowed to grow the economy as one of his top five priorities.

His governing Conservatives are currently trailing Keir Starmer’s main opposition Labour Party ahead of a general election.

It also marks the UK’s first recession since the first half of 2020, when the economy was slammed by fallout from the Covid pandemic.

“Our initial estimate shows the UK economy contracted in the fourth quarter of 2023,” said ONS director of economic statistics Liz McKeown.

“While it has now shrunk for two consecutive quarters, across 2023 as a whole the economy has been broadly flat.

“All the main sectors fell on the quarter, with manufacturing, construction and wholesale being the biggest drags on growth.”

In reaction to the data, finance minister Jeremy Hunt added that “high inflation is the single biggest barrier to growth”.

The recession news data comes one day after separate official data showed that UK inflation held at 4.0 percent in January from December, or double the Bank of England’s target rate.

Source: The Punch

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