The UK economy continued to contract in the fourth quarter of 2023, entering a recessionary phase and posing increased challenges for British Prime Minister Rishi Sunak, who had promised to boost growth ahead of the expected 2024 elections.
According to data from the UK’s Office for National Statistics, the Gross Domestic Product (GDP) shrank by 0.3% in the final quarter of 2023 following a contraction of 0.1% in the previous quarter. A recession in the economy, indicated by negative growth for two consecutive quarters, is being experienced.
Economists surveyed by Reuters anticipated a contraction of 0.1% in the UK economy in the last quarter of the previous year. The decline in the UK’s GDP in the final quarter of the previous year was the largest since 2021.
The British economy has been facing a recession for nearly two years, but the Bank of England forecasts a slight recovery in 2024.
Alarm bells are ringing, as Alex Veitch, Director of Policy and Insights at the British Chambers of Commerce, was quoted by Reuters stating that businesses were already struggling, and this news would undoubtedly sound the alarm for the government. He emphasized the need for the Chancellor of the Exchequer to use his budget in less than three weeks to set a clear path for businesses and the economy to grow further.
Chancellor of the Exchequer Jeremy Hunt mentioned signs that the British economy is at a turning point and emphasized the importance of sticking to the plan to reduce taxes on labor and businesses to build a stronger economy.
Reports suggest that Hunt is aiming to cut billions of pounds from public spending plans to fund tax cuts before the elections in his upcoming budget set for March 6. The Office for National Statistics reported that the UK’s GDP fell by 0.1% on a monthly basis in December, after a growth of 0.2% in the preceding two months.
Experts had indicated the possibility of a 0.2% monthly contraction in the economy in December. The Office for National Statistics noted that the manufacturing, construction, and wholesale sectors were the largest contributors to the decline in GDP.
