Prime Minister Rishi Sunak’s assertion that the economy is expanding ahead of a general election was undermined when the UK entered a brief recession in the second half of 2023.
According to data released by the Office for National Statistics on Thursday, the fourth quarter’s GDP decline was 0.3%, rather than the 0.1% decline that experts had predicted. It came after three months of unrevised declines of 0.1%.
Two consecutive quarters of declining production are considered a technical recession by economists, however the UK may be experiencing stagnation rather than a full-blown slump due to the tiny size of the drops.
Following the announcement, the pound lost value relative to the dollar. It reached a new low for the third day of losses at $1.2548, down as much as 0.1%.
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The opposition will probably use the numbers to criticize the way the incumbent Conservative government has handled the economy in the run-up to the anticipated general election in the second half of 2024.
The Tories, who behind Labour by almost 20 percentage points in national opinion polls, are predicted to suffer significant losses in the two special elections that are being held on this day.
Growing the economy was one of Sunak’s five main promises from the previous year. But according to ONS data, the UK stalled during his first full year in office as prime minister.GDP growth in 2023 was just 0.1% overall, and it decreased by 0.2% in the fourth quarter from the same period the previous year.
A sharp increase in interest rates that put pressure on debtors and the greatest cost-of-living crises in decades have crippled the UK economy. December’s GDP decline was exacerbated by strikes in the rail and health sectors as well as a sharp decline in retail sales.
This Monday, Governor Andrew Bailey of the Bank of England downplayed the importance of a technical recession, citing indicators of a “upturn” in polls conducted since the beginning of 2024.
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