Households cut spending as UK economy slips into recession

Official figures from the Office for National Statistics (ONS) have revealed that the UK has slipped into a technical recession after the economy shrank by more than expected.

The figures revealed by ONS on Thursday revealed that the gross domestic product (GDP) dropped by 0.3% between October and December.

The news deals a blow to Prime Minister Rishi Sunak, who has promised to grow the economy as one of his five priorities, especially after most economists were only forecasting a 0.1 percent decline in GDP.

With elections less than a year away and Sunak’s economy policies not yielding results, Rachel Reeves, the shadow chancellor, said: “The prime minister can no longer credibly claim that his plan is working or that he has turned the corner on more than 14 years of economic decline under the Conservatives that has left Britain worse off.

“This is Rishi Sunak’s recession, and the news will be deeply worrying for families and businesses across Britain.”

The ONS said growth over the course of 2023 as a whole was estimated at 0.1%, the weakest year since 2009 during the financial crisis, excluding the economic collapse in 2020 during the COVID pandemic.

The director of economic statistics at the ONS, Liz McKeown, said: “Our initial estimate shows the UK economy contracted in the fourth quarter of 2023. While it has now shrunk for two consecutive quarters, across 2023 as a whole, the economy has been broadly flat.

“All the main sectors fell in 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.”

Persecondnews recalls that data from the Office for National Statistics reveals that the UK Gross Domestic Product (GDP) experienced stagnation in the third quarter (Q3) of 2023, showing no growth.

Analysing the economic landscape between July and September, the stagnation in the third quarter marks the first time the UK economy has failed to grow since Q3 2022.

September alone saw a marginal growth of 0.2%, following a 0.1% uptick in August.