April 24, 2024
Economy

U.K. economy slides into recession ahead of election


The U.K. economy slipped into a “technical” recession in 2023, with the final quarter for last year showing a decline in GDP of 0.3%, on the back of a 0.1% decline in growth in the third quarter, as per data released by the country’s Office for National Statistics (ONS) on Thursday. The news was quickly deployed by the opposition Labour Party as a reason to vote out Rishi Sunak’s Conservative government in elections later this year.

“Rishi Sunak has failed to turn the corner on 14 years of Tory economic decline,” Labour leader Keir Starmer said, adding that Labour alone could deliver the change that was needed. Construction, production and services were all down in the final quarter of 2023 as per the ONS. The U.K. grew at 0.1% over 2023 — the weakest growth registered since the 2009 financial crisis, barring 2020, when the pandemic began.

Labour’s shadow chancellor said Mr. Sunak’s plan to grow the economy was “in tatters”.

“Growing the economy” was one of five promises Mr. Sunak had made in January 2023 to energize his party’s flagging poll prospects.

With an eye on the elections, Chancellor Jeremy Hunt is expected to cut taxes in the Budget, which is due on March 6. The tax cuts are reportedly being financed by billions of pounds in funding cuts for public services, which are already in disarray.

“But I would only cut taxes in a way that was responsible,” Mr. Hunt told Sky News on Thursday, adding that he did not want to jeopardize inflation levels, which have fallen since last year. Despite being faced with the latest GDP figures, Mr. Hunt insisted that the economy was “more resilient” than most people had predicted, as he pointed to falling inflation and growing real wages.

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