April 25, 2024
Economy

UK recession live: Rishi Sunak’s promise to grow the economy ‘in tatters’ as ONS reveals technical downturn


Hunt insists plan to bring inflation down is working despite 4 per cent increase

Rishi Sunak’s pledge to grow the economy is “in tatters”, shadow chancellor Rachel Reeves has warned, as the UK fell into recession.

The Office for National Statistics (ONS) revealed on Thursday a 0.3 per cent decline in gross domestic product (GDP) between October and December 2023.

The gloomy official figures mean the economy entered a technical recession, as defined by two or more quarters in a row of falling GDP, for the first time since amid the pandemic in the first half of 2020.

The news deals a blow to the prime minister, who has promised to grow the economy as one of his five priorities, especially after most economists were only forecasting a 0.1 per cent decline in GDP.

In comments Labour suggested were “out of touch”, chancellor Jeremy Hunt said low economic growth is “not a surprise”, but added that the UK must “stick to the plan – cutting taxes on work and business to build a stronger economy” despite tough times for many families.

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Labour says the prime minister’s promise to grow the economy is in ‘tatters’

Labour has said the prime minister’s promise to grow the economy is in “tatters” following the news this morning that the UK has slipped into recession, reports political correspondent Zoe Grunewald.

The shadow chancellor Rachel Reeves has responded to the latest figures showing that the UK economy has entered a technical recession: “Rishi Sunak’s promise to grow the economy is now in tatters.

“The prime minister can no longer credibly claim that his plan is working or that he has turned the corner on more than fourteen years of economic decline under the Conservatives that has left Britain worse off. This is Rishi Sunak’s recession and the news will be deeply worrying for families and business across Britain.”

She added: “It is time for a change. We need an election now to give the British people the chance to vote for a changed Labour Party that has a long-term plan for more jobs, more investment and cheaper bills. Only Labour has a plan to get Britain’s future back.”

Zoe Grunewald, Political Correspondent15 February 2024 07:16

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‘Overly dramatic to label economic decline a recession,’ says economist

Economist Samuel Tombs from Pantheon Macroeconomics insists it is “overly dramatic to label the decline in economic activity in the second half of 2023 a recession, given that employment continued to rise, real wages rebounded and measures of business and consumer confidence returned to levels consistent with rising activity by the end of the year.”

He said there was also a good chance that revisions to economic data by the ONS may see the recession avoided in the end.

He said: “We expect quarter-on-quarter growth in gross domestic product to average 0.3 per cent in 2024, driven by a pick-up in households’ real expenditure.

“The [Bank of England’s] Monetary Policy Committee, therefore, needn’t panic that the economy weakened at the end of last year and can proceed with its plans to cut Bank Rate only gradually this year.”

Andy Gregory15 February 2024 09:40

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Japan loses title of world’s third-largest economy with unexpected slip into recession

Germany has overtaken Japan as the world’s third-largest economy after the latter unexpectedly slipped into recession, as it struggles with a weak yen and an ageing population.

Japan’s GDP fell an annualised 0.4 per cent in the quarter to December after a 3.3 per cent slump in the previous quarter, government data showed on Thursday, confounding market forecasts for a 1.4 per cent increase.

When not adjusting for inflation, Japan’s nominal GDP stood at $4.21trn in 2023, falling below $4.46trn for Germany to rank as the world’s fourth largest economy, the data showed, more than a decade after falling behind China.

The recession raises questions over whether Japan will further delay a much-anticipated decision to raise the cost of borrowing, after a decade of ultra-loose monetary policy, having brought in a negative interest rate in 2016 in a bid to boost spending and investment, but which has weakened the yen.

Andy Gregory15 February 2024 09:09

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Last time UK entered recession was during first Covid lockdown

The new figures mark the first time the UK has entered recession since the first half of 2020, when the initial Covid lockdown sent the economy plunging into reverse.

Economists said the recession is likely to be short-lived, with GDP expected to pick up from the start of 2024.

But the figures are damning for prime minister Rishi Sunak, who has vowed to grow the economy as one of his five priorities.

Andy Gregory15 February 2024 08:50

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Growing population hiding fact UK economy hasn’t grown since 2022, expert says

Britain is a “stagnation nation”, with a growing population hiding the impacts of recession, a think tank has warned.

“Britain has fallen into recession, and a far deeper living standards downturn. Even this weak data is flattered by a rising population,” said James Smith, research director at the Resolution Foundation.

“After accounting for population growth, the UK economy hasn’t grown since early 2022, and fallen far behind its pre-cost-of-living crisis path, with an equivalent loss of around £1,500 per person.

“The big picture is that Britain remains a stagnation nation, and that there are precious few signs of a recovery that will get the economy out of it.”

Andy Gregory15 February 2024 08:39

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Video report: UK officially in recession after latest GDP figures

UK officially in recession after latest GDP figures

Andy Gregory15 February 2024 08:29

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Hunt insists prioritising tackling inflation is ‘right thing to do’

Jeremy Hunt has insisted it is the “right thing to do” to prioritise tackling inflation, after the UK slid into technical recession.

The chancellor told broadcasters: “We always expected growth to be weaker while we prioritised tackling inflation, that means higher interest rates, and that is the right thing to do because you can’t have long-term healthy growth with high inflation.

“But also for families when there is a cost-of-living crisis, when the cost of their weekly shop is going up, their energy bills are much higher, it is the right thing to do.

“The underlying picture here is an economy that is more resilient than most people predicted, inflation is coming down, real wages have been going up now for six months.

“If we stick to our guns, independent forecasters say that by the early summer we could start to see interest rates falling and that will be a very important relief for families with mortgages.”

(Aaron Chown/PA)

Andy Gregory15 February 2024 08:28

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Labour suggests Chancellor ‘out of touch’ after comments on recession

Labour suggested Jeremy Hunt’s comments on the UK entering technical recession meant the Chancellor was “out of touch”.

A spokesperson for the Labour Party said: “Jeremy Hunt’s comments are as insulting as they are out of touch.

“The Conservatives’ failure to take any responsibility for Rishi’s recession show why we need an election.”

Chancellor Jeremy Hunt said low economic growth is “not a surprise”, but added that the UK must “stick to the plan – cutting taxes on work and business to build a stronger economy” despite tough times for many families.

Tara Cobham15 February 2024 08:03

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‘News will not be front of mind for millions already in unjustifiable hardship,’ says economist

Joseph Rowntree Foundation chief economist Alfie Stirling said: “Today’s news that the economy entered a technical recession is concerning, but it will not be front of mind for the millions already in unjustifiable hardship.

“Fridges are either off or empty as already eye-watering food prices continue to rise. Loan and mortgage repayments are being missed as elevated interest rates crush family finances. And jobs are increasingly at risk as the labour market continues to deteriorate.

“Just weeks before the Budget, addressing this crisis of economic security, from individual families to the nation as a whole, must be the first priority for policymakers. This starts with reforming Universal Credit to reflect the actual cost of essentials, and a revitalisation of key services across care, housing, and job support.

“There is no quick fix. Business investment may be the lifeblood of a growing economy, but social security and public services provide the heartbeat.”

Tara Cobham15 February 2024 08:00

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Economy in ‘dire straits’ after ‘years of Tory stagnation’, says TUC chief

The Trade Union Congress’ General Secretary Paul Nowak has today said that the UK economy is in “dire straits” after “years of Tory stagnation”.

He added: “The Conservatives’ economic failures are hitting jobs and living standards. With household budgets at breaking point, spending is down and the economy is shrinking. At the same time our crumbling public services are starved of much-needed funding.

“After being in power for 14 years, the Tories have driven our economy into a ditch and have no idea how to get out.

“It’s time for a government with a serious long-term plan and strategy for renewal, to revive our economy and sustain growth into future.”

The Trade Union Congress’ General Secretary Paul Nowak has today said that the UK economy is in ‘dire straits’ after ‘years of Tory stagnation’

(PA Wire)

Zoe Grunewald, Political Correspondent15 February 2024 07:55



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