April 13, 2024
Economy

Has the government failed in its pledge to grow the economy?


New figures show that real UK Gross Domestic Product (GDP) growth was negative in consecutive quarters, meeting what’s popularly understood to be the definition of a recession.

We’ve taken a look at what these figures mean for the Prime Minister’s commitment to “grow the economy”—one of five key pledges he made in January last year.

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What do the figures show?

Data published by the Office for National Statistics (ONS) today shows that while the UK economy did grow slightly over the whole of 2023, up by 0.1% compared to 2022, growth in the second half of the year has been negative—in other words, GDP fell.

In October to December 2023, the economy shrank by 0.3% compared to the previous quarter (July to September), which itself saw negative growth of -0.1% compared to April to June 2023.

It’s worth bearing in mind that these figures may be revised—for example today’s update shows the figures for January to March 2023 growth have been revised down from the previous estimate of 0.3%, to 0.2%.

What was Rishi Sunak’s pledge?

In January last year, Mr Sunak outlined “five key priorities” for 2023—since often referred to as his “five pledges”. The second of these stated: “We will grow the economy, creating better-paid jobs and opportunity right across the country.”

As with a number of the other priorities, the Prime Minister did not commit to a specific definition or timescale for meeting this pledge at the time.

We’ve seen a number of different interpretations in the media of what today’s GDP figures mean for the Prime Minister’s pledge, with some suggesting it has been “technically” fulfilled because the economy grew overall in 2023.

However, last year the BBC reported that Downing Street had said the pledge would be met if the economy was bigger in the last quarter of 2023 than in the three months before, while the Daily Telegraph reported Downing Street as saying the pledge would be met if economic growth in the fourth quarter of 2023 was higher than in the third.

We’ve asked Number 10 today to confirm if these reports were accurate and what measure it was assessing the pledge against, but have received no response.

Today’s figures would mean that based on those definitions the Prime Minister has failed to meet his pledge to grow the economy. The economy was not only smaller in the last three months of 2023 than it was in the previous quarter, but also saw a bigger fall towards the end of the year.

 

Economic growth since PM’s pledge is weak by any definition

Regardless of how you interpret Mr Sunak’s pledge, the latest figures show that the UK economy was effectively stagnant in 2023.

As noted above, GDP grew overall by 0.1% in 2023 compared to 2022, with only one quarter seeing positive growth (of 0.2%). Excluding 2020, which was impacted by the Covid-19 pandemic, this represents the weakest annual growth for the UK economy since the 2009 financial crisis.

Today’s figures also show that GDP per capita decreased by 0.7% in 2023 compared to 2022, with negative growth in all four quarters.

Image courtesy of Number 10



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