LONDON – Britain’s economy fell into a recession in the second half of 2023, a tough backdrop for Prime Minister Rishi Sunak who has promised to boost growth ahead of an expected 2024 election.
The Office for National Statistics (ONS) said gross domestic product (GDP) contracted by a worse-than-expected 0.3 per cent in the three months to December, having shrunk by 0.1 per cent between July and September.
A Reuters poll of economists pointed to a smaller 0.1 per cent fall in the October-to-December period.
The dip in GDP in the fourth quarter is the biggest since the first quarter of 2021, the ONS said.
Britain’s economy has been stagnating for nearly two years. The Bank of England has said it expects a slight pick-up in 2024.
“Businesses were already under no illusion about the difficulties they face, and this news will no doubt ring alarm bells for the government,” Mr Alex Veitch, director of policy and insight at the British Chambers of Commerce, said.
“The Chancellor must use his Budget in just under three weeks’ time to set out a clear pathway for firms and the economy to grow.”
Finance Minister Jeremy Hunt said there are “signs the British economy is turning a corner” and “we must stick to the plan – cutting taxes on work and business to build a stronger economy”.
Media reports said he is seeking to cut billions of pounds from public spending plans to fund pre-election tax cuts in his March 6 Budget, if penned in by tight finances.
Economic output fell by 0.1 per cent month-on-month in December after a 0.2 per cent growth in November, the ONS reported. The Reuters poll pointed to a 0.2 per cent fall in December.
The pound weakened moderately against the US dollar and the euro shortly after the GDP data release.
The ONS said the manufacturing, construction and wholesale sectors were the largest contributors to the decrease in GDP. REUTERS
