UK economy entered recession last year – GDP

The UK’s economic performance in 2023 reflected a challenging environment, with GDP contracting by 0.1% in the third quarter and a further 0.3% in the fourth quarter, as confirmed by official figures. This confirms that the UK entered a shallow recession last year, presenting a significant challenge for Prime Minister Rishi Sunak as he seeks to reassure voters about the stability of the economy ahead of an expected election later in the year.

Although there are indications of a stronger start to 2024, with GDP growing by 0.2% in January and unofficial surveys suggesting continued growth in February and March, the pace of recovery from the COVID-19 pandemic has been sluggish. The UK’s economy remains just 1% larger than its late 2019 level, with only Germany among Group of Seven nations experiencing a worse performance.

In 2023 as a whole, the UK economy grew by just 0.1%, marking its weakest performance since 2009, excluding the substantial GDP decline in 2020 caused by the pandemic.

Looking ahead, the Bank of England has signaled that British inflation is approaching a level where it may consider cutting interest rates. However, the Bank’s growth forecast for this year is modest, expecting just a 0.25% expansion, while official budget forecasters anticipate a slightly higher 0.8% growth rate. These projections suggest continued uncertainty and challenges for the UK economy as it navigates the post-pandemic recovery phase.