Blow for Sunak as revised figures confirm UK did go into recession last year
Latest estimate from ONS says GDP declined by 0.3% in final quarter of 2023
Official figures have confirmed the UK economy went into recession at the end of last year, after the latest estimate found it had 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, 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 chancellor George Osborne was eventually found not to have happened.
However, the ONS said said all three sectors – services, production and construction – suffered falling output in the final quarter of 2023 and a deeper recession was only prevented 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 suffered 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 the economic recovery in 2024 and 2025 showed it will be stronger than the Bank of England expects.
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