LONDON, 28 March. - (ANA) -Official figures have confirmed that the United Kingdom (UK) economy went into recession at the end of last year, after the latest estimate found it contracted in the last two quarters of 2023.

 

In a blow to the government’s economic standing, the Office for National Statistics (ONS) said the economy, as measured by gross domestic product, shrank by 0.3% in the last three months of the year, unrevised from an earlier estimate.

 

It followed a contraction of 0.1% in the third quarter of 2023, confirming a technical recession – two consecutive quarters of negative growth.

 

As he prepares for a general election, Rishi Sunak has been seeking to reassure Tory MPs that the economy is turning around, after business surveys showed a recovery in private sector activity in the first few months of the year.

 

Some previous recessions have been revised away or downgraded to be less severe than first believed. The “double-dip” recession initially recorded by the ONS in 2011 during the tenure of the then chancellor, George Osborne, was eventually found not to have happened.

 

However, the ONS said all three sectors – services, production and construction – showed falling output in the final quarter of 2023 and a deeper recession was prevented only by a rise in government spending.

 

Services declined by a milder 0.1% compared with a 0.2% fall in the first estimate, but without making a difference to the overall decline in the wider economy, the ONS said.

 

Britain’s trade declined and household consumption also fell despite a fall in inflation towards the end of 2023.

 

The ONS said retail sales had the largest monthly fall in December since January 2021 when Covid-19 pandemic restrictions were in place.

 

Ashley Webb, a UK economist at the consultancy Capital Economics, said: “The UK’s mild technical recession at the end of last year was as mild as previously thought and the economic recovery is probably already under way.”

 

He said the firm’s forecast for the economic recovery in 2024 and 2025 was that it would be stronger than the Bank of England expects.

 

The firm has predicted that inflation will fall further than the Bank of England expects and “interest rates to be cut faster and further than current market pricing suggests”.

 

The shadow chancellor, Rachel Reeves, said the ONS figures showed that Rishi Sunak had “broken his promise to grow the economy and left Britain in recession with working people paying the price. The Conservatives cannot claim that their plan is working or that they have turned the corner on more than 14 years of economic failure.”

 

Jeremy Hunt said last year was “tough” after interest rates remained high to bring down inflation, “but we can see our plan is working”.

 

The chancellor added: “Inflation has fallen decisively from over 11% to 3.4%, the economy grew in January and real wages have increased for eight months in a row. Our cuts to national insurance will boost growth by rewarding work and putting over £900 a year back into the average earner’s pocket.”    - (ANA) -

 

AB/ANA/28 March 2024 - - -