UK economy in technical recession months before parliamentary election

UK economy in technical recession months before parliamentary election

Weak growth follows British GDP fell by 0.3 per cent in the last quarter of 2023, following a 0.1 per cent contraction in the July to September period. The United Kingdom's Office for National Statistics, ONS, confirmed a tech recession at the end of last year. A recession is defined by two consecutive quarterly contractions.

“All major sectors slowed this quarter, with manufacturing, construction and wholesale making the biggest drag on growth, partially offset by growth in hotels and vehicle and machinery hire,” ONS director Liz McKeown said in a statement.

The decline in economic activity between October and December 2023 was widespread across all sectors, with services contracting by 0.2 percent, while manufacturing activity fell by one percent and construction by 1.3 percent.

UK GDP expanded by just 0.2 per cent in the first quarter of 2023, stagnating between April and June last year and falling 0.1 per cent in the third quarter and 0.3 per cent in the fourth quarter.

In 2023, the ONS estimates that British GDP will increase by just 0.1 per cent. The weakest annual GDP change since 2009While the economy was still reeling from the effects of the global financial crisis, 2020 is the exceptionA year in the wake of the Covid-19 pandemic.

2022 sees growth of 4.3 percent, but “throughout 2023, the overall economy is generally flat,” McKeown said.

The impact of the revelation could be quickly reflected in the polls, where Labor already holds a large advantage over Sunak's Conservatives ahead of general elections later this year.
Hunt's belief
“The shallow depth of this recession is reassuring. These numbers also confirm that our economy is stuck in a cycle of continued stagnation in 2023″, reflected Suren Thiru, director of economics at the Institute of Chartered Accountants in England and Wales.

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However, the head of UK finance was unimpressed and was keen to remind the Bank of England that the Bank of England's previous predictions had not materialised.

Jeremy Hunt loved optimism and promised positive results for his plans for the economy. And, albeit tenuously, there is indeed a light at the end of the tunnel of resilience and practical stagnation.

Last month, several analysts polled by the Reuters agency expected economic growth to be 0.1 percent in the first and second quarters of 2024, and to pick up slightly to 0.2 percent in the second and fourth quarters, when electoral law measures are due. Place.

Growth was significantly lower than the 0.5 percent quarterly average seen in the five years before the pandemic, but still higher than the Bank of England estimate.

Hunt is expected to announce further tax cuts when he releases his budget on March 6, which will have a positive economic impact.

Last November, Sunak and Hunt announced tax cuts for workers, and a reduction in social contributions, starting in January. In April, low-income families will get another boost when the minimum wage rises nearly 10 percent.

Other indicators
Wednesday, the Financial Times Jeremy Hunt has announced that he is preparing to announce further billion-pound cuts to the general budget to fund his tax cuts.

Inflation is a factor to consider. 2022 saw a sharp drop in household income when it reached 11.1 percent in October. A record in 41 years. It has been declining since then, most notably in recent months, but the trend may reverse towards the end of the year.

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After all Wages are rising faster than inflation. Around six percent on an annual basis by the end of 2023, which will lift the pressure somewhat. In recent months, confidence among consumers has increased.

Unemployment is expected to rise in 2024 as firms begin to feel the impact of a sharp rise in interest rates set by the Bank of England between December 2021 and August 2023.

However, estimates point to unemployment growth at 4.6 percent by the end of 2024, below initial projections of 4.9 percent.And for example, at a significantly lower level than in 2011, the United Kingdom, still recovering from the global financial crisis, reached 8.1 percent.

(with agencies)

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