Official figures confirmed Britain’s economy entered a shallow recession in 2023, leaving Prime Minister Rishi Sunak with a challenge to reassure voters that the economy is safe with him before an election expected later this year.
Gross domestic product shrank by 0.1 per cent in the third quarter and by 0.3 per cent in the fourth quarter, unchanged from preliminary estimates, the Office for National Statistics said on Thursday.
The figures will be disappointing for Sunak who has been accused by the opposition Labour Party – which is far ahead in opinion polls – of overseeing “Rishi’s recession”.
Britain’s economy has shown signs of starting 2024 on a stronger footing with GDP growing by 0.2 per cent in January from December and unofficial surveys suggesting growth continued in February and March.
However, the UK has been slow to recover from the effects of the COVID-19 pandemic, and its economy stands just one per cent bigger than its level of late 2019, with only Germany among G7 nations faring worse.
The economy in 2023 as a whole grew by just 0.1 per cent, its weakest performance since 2009 at the end of the global financial crisis, excluding the huge hit to GDP in 2020 caused by the pandemic.
The Bank of England, which has said British inflation is moving towards the point where it can start cutting interest rates, expects the economy to grow by just 0.25 per cent this year although official budget forecasters expect a 0.8 per cent expansion.
Thursday’s figures also showed growth in households’ real disposable income of 0.7 per cent compared with no change in the previous quarter.
People were saving slightly more, the ONS said, as the savings ratio rose to 10.2 per cent in the three months to December from 10.1 per cent in the quarter before.