BRITAIN FALLS INTO RECESSION, OFFICIAL DATA SHOWS

Thu 15 February 2024:

Only months before a general election, official numbers released on Thursday revealed that the UK has entered a recession, jeopardizing Prime Minister Rishi Sunak’s promise of boosting economic growth.

According to the Office for National Statistics, the gross domestic product shrank by 0.3% in the last three months of 2023, after contracting by 0.1% from July to September of the previous year. Two quarters of contraction following one another is the standard definition of a recession.

“All the main sectors fell on the quarter, with manufacturing, construction and wholesale being the biggest drags on growth, partially offset by increases in hotels and rentals of vehicles and machinery,” ONS director of economic statistics Liz McKeown said in a statement.

“Across 2023 as a whole the economy has been broadly flat.”

U.K. Finance Minister Jeremy Hunt said that high inflation remains “the single biggest barrier to growth,” since it is forcing the Bank of England to keep interest rates firm and stymie economic growth.

“But there are signs the British economy is turning a corner; forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low,” he added.

Media reports said Hunt was seeking to cut billions of pounds from public spending plans to fund pre-election tax cuts in his March 6 budget, if penned in by tight finances.

Inflation has come down markedly in the U.K., but remains well above that of the country’s economic peers and the Bank of England’s 2% target, squeezing household finances. The headline consumer price index reading came in at 4% year-on-year in January.

The economy of Britain hasn’t grown in almost two years. Although poor growth this year will still provide a challenging environment for Prime Minister Rishi Sunak’s efforts to win support ahead of a national election that is expected later in 2024, the Bank of England has stated that it expects it to pick up slightly in 2024.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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