England officially entered the brink of Recession, The UK economy fell into recession in the second half of 2023, falling short of Prime Minister Rishi Sunak’s growth targets. UK gross domestic product (GDP) contracted by 0.3% compared to the previous quarter in the fourth quarter of 2023. The UK entered a technical recession after experiencing a 0.1% contraction in the previous quarter.
The fourth-quarter contraction was deeper than all economists expected in a Reuters poll, which showed a decline of 0.1%.
Investors are raising their expectations that the Bank of England (BoE) will cut interest rates this year and businesses are asking for more help from the government in the budget plan to be released on March 6, 2024.
Britain joins Japan among the G7 countries experiencing a recession, although this recession is likely to be short and shallow by historical standards. Canada has not yet reported GDP data for the fourth quarter of 2024.
The UK economy is just 1% higher than its level at the end of 2019, before the Covid-19 pandemic hit, with only Germany among the G7 countries faring worse.
Sunak pledged to increase economic growth as one of his main promises to voters last year. The Conservative Party he leads has dominated British politics for almost the last seven decades, with a reputation as a party with economic competence.
Analysts say British households are projected to see their living standards fall for the first time between one national election and the next since World War II.
England officially entered the brink, Capital Economics’ deputy chief UK economist Ruth Gregory said the GDP figures had greater political significance than economic significance, with voters set to elect MPs in two constituencies on Thursday.
