April 25, 2024

UK economy falls into recession, adding to Sunak’s election challenge

LONDON: 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 per cent in the fourth quarter of 2023 after contracting 0.1 per cent 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-19 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 per cent in January from December, or double the Bank of England’s target rate.

Britain’s economy has been stagnating for nearly two years, though recessions in the country have become increasingly rare as the economy grows larger and more mature.

The COVID-19 pandemic triggered the deepest contraction on record over two quarters in early 2020. Before that the global financial crisis sparked a severe recession that lasted just over a year, from the second quarter of 2008 through to the second quarter of 2009.

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