Support our Nation today - please donate here
News

Prime Minister’s pledge under pressure after UK fell into recession

15 Feb 2024 4 minute read
Prime Minister Rishi Sunak arrives to give evidence to the UK Covid-19 Inquiry. Photo Jordan Pettitt/PA Wire

Prime Minister Rishi Sunak’s pledge to grow the economy has been dealt a hammer blow after official figures revealed Britain fell into recession at the end of last year.

The Office for National Statistics (ONS) estimated that gross domestic product (GDP) fell by a worse-than-expected 0.3% between October and December, following a decline of 0.1% in the previous three months.

It means that the economy entered a technical recession, as defined by two or more quarters in a row of falling GDP.

It marks the first time the UK has entered recession since the first half of 2020, when the initial Covid-19 lockdown sent the economy plunging into reverse.

Economists said the recession is likely to be short-lived, with GDP expected to pick up from the start of 2024.

Damning

But the figures are damning for Mr Sunak, who has vowed to grow the economy as one of his five priorities.

Shadow chancellor Rachel Reeves said his economic pledge has been left “in tatters”.

She 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 business across Britain.”

Chancellor Jeremy Hunt said the contraction comes off the back of high inflation and the recent run of interest rate rises, but insisted the economy was turning a corner.

He said it was the “right thing to do” to prioritise tackling inflation.

Inflation

The Chancellor told broadcasters: “We always expected growth to be weaker while we prioritised tackling inflation, that means higher interest rates, and that is the right thing to do because you can’t have long-term healthy growth with high inflation.

“The underlying picture here is an economy that is more resilient than most people predicted, inflation is coming down, real wages have been going up now for six months.

“If we stick to our guns, independent forecasters say that by the early summer we could start to see interest rates falling and that will be a very important relief for families with mortgages.”

The fourth quarter contraction was the biggest since the first three months of 2021, at the height of the pandemic.

Most economists were forecasting a 0.1% decline in GDP between October and December.

The ONS said output fell 0.1% in December after downwardly-revised growth of 0.2% in November, while the contraction in October was also worse than first thought, at 0.5% against the 0.3% fall initially estimated.

Across the year as a whole, the economy grew, but by an anaemic 0.1%, down from 4.6% growth in 2022 and – when stripping out the pandemic-hit plunge seen in 2020 – the weakest expansion since the aftermath of the financial crisis in 2009.

The ONS said the contraction was broad-based across the economy in the fourth quarter.

Liz McKeown, ONS director of economic statistics, said: “All the main sectors fell on the quarter, with manufacturing, construction and wholesale being the biggest drags on growth.”

Contracting

Retail and wholesale trade were the biggest pull on output in December, while health and education sectors also both contracting, according to the ONS.

Barret Kupelian, chief economist at PwC UK, said while the UK is in a technical recession, it would likely not be long-lasting or deep.

He said: “We expect this episode to be one of the shallowest recessions of modern times, as it does not reflect a sharp and protracted downturn in response to a specific set of adverse economic circumstances.

“Business activity picked up significantly in the beginning of the year, which should translate to better real economic data.”

But a technical recession is seen reinforcing the case for an interest rate cut, with the Bank of England already indicating it is more a case of when, not if, a reduction will come.


Support our Nation today

For the price of a cup of coffee a month you can help us create an independent, not-for-profit, national news service for the people of Wales, by the people of Wales.

Subscribe
Notify of
guest
6 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Jeff
Jeff
1 month ago

Integrity, professionalism and accountability.
That is what he said after he took over from a PM that lost to a lettuce, the second place PM that Sunak is.
The bloke was never in touch with reality, selling off the NHS and continuing to enrich his chums, his family continue to make money from the UK whilst many cannot heat and eat, there is no room anymore for this party in the UK.

Mab Meirion
Mab Meirion
1 month ago

The ‘Nation’ fell under a big red bus daubed with Fat Shanks’ lies and Farage stood in front a poster full of lies…

Jo Cox died because of those lies…

Last edited 1 month ago by Mab Meirion
Dai Ponty
Dai Ponty
1 month ago
Reply to  Mab Meirion

I would use the word MURDERED because of those lies to kill someone could be an accident Jo Cox was MURDERED by the hate thrown about by the right

Karl
Karl
1 month ago

They pushed it into recession to get the inflation down. Nothing new about that simplistic approach. You hike interest rates to starve an economy. Doesn’t help that they are massaging brexit lies. Comparing poor figures from 2 yrs ago to last year. Ignoring the huge drop off of exports that brexit caused few yrs before that. It’s plain to see, but on he goes as a PM with no mandate and a hard brexit nobody was asked to vote for.

Richard Davies
Richard Davies
1 month ago

If you aren’t in the top 1% the tories don’t care about you!

jeremy C hunt will make cuts to funding of public services, that most people rely on, in order to give more tax cuts to the already wealthy!

We may well have historically high levels of taxation in uk, it is still much, much lower than most of Europe!

Last edited 1 month ago by Richard Davies
Y Cymro
Y Cymro
1 month ago

Sunak’s pledge to grow the economy means nothing to those in Wales suffering austerity and the continuing cost of living crisis. Those enduring job losses in Port Talbot and throughout Wales. Welsh farmers ongoing issues selling their goods to Europe with all the red tape he and his gaggle of lying ERG BritNat extremists promised unfettered oven ready access. All the barriers Wales faces because you’ve denied further devolution to our Senedd Cymru, devolution over Air Tax Duty that could make struggling Cardiff International Airport viable, powers denied because regional airport Bristol bemoaned Cardiff would have an unfair advantage, the… Read more »

Our Supporters

All information provided to Nation.Cymru will be handled sensitively and within the boundaries of the Data Protection Act 2018.