Britain’s economy fell into recession in the second half of 2023, a tough backdrop for Prime Minister Rishi Sunak, who has pledged to boost growth ahead of the expected 2024 election, Reuters reported.
The office for National Statistics (ONS) reported that gross domestic product (GDP) shrank 0.3 per cent in the three months to December, having contracted 0.1 per cent between July and September. The fall in GDP in the fourth quarter was the biggest since the first quarter of 2021, the ONS stated.
The British economy has been stagnant for almost two years, with the Bank of England stating that it expects modest growth in 2024. Alex Veitch, director of policy and insight at the British Chambers of Commerce, stated:
Businesses were already under no illusion about the difficulties they face, and this news will no doubt ring alarm bells for government. The chancellor must use his budget in just under three weeks’ time to set out a clear pathway for firms and the economy to grow.
Finance Minister Jeremy Hunt stated that there were “signs the British economy is turning a corner,” and the government should “cut taxes on work and business to build a stronger economy.”
Economic output fell 0.1 per cent month-on-month in December after rising 0.2 per cent in November, the ONS reported. Sterling weakened moderately against the dollar and euro following the release of the GDP data. The ONS commented that manufacturing, construction and wholesale trade contributed the most to the decline in GDP.
