Official figures have confirmed that the UK economy slipped into recession at the end of last year, after the latest estimate that it contracted in the last two quarters of 2023.
In a blow to the government's economic position, the Office for National Statistics (ONS) said the economy, as measured by gross domestic product (GDP), shrank by 0.3% in the last three months of the year, unchanged from the previous estimate.
This followed a 0.1% contraction in the third quarter of 2023, confirming a technical recession – two consecutive quarters of negative growth.
Rishi Sunak has sought to reassure Tory MPs that the economy is turning around after business polls showed a rebound in private sector activity in the first few months of the year as he prepares for the general election.
Some earlier recessions were revised down or downgraded to less severe than originally believed. The „double dip” recession recorded by the ONS during Chancellor George Osborne's tenure in 2011 was found not to have happened after all.
However, the ONS said all three sectors – services, manufacturing and construction – saw output fall in the final quarter of 2023, with a deeper recession only prevented by an increase in government spending.
Services fell by a mild 0.1%, compared with a 0.2% fall in the first estimate, but with no difference to the overall decline in the wider economy, the ONS said.
At the end of 2023, although inflation fell, Britain's trade fell and household consumption fell.
The ONS said retail sales in December suffered the biggest monthly fall since January 2021, when the Covid-19 pandemic restrictions came into force.
Ashley Webb, UK economist at consultancy Capital Economics, said: „The UK's mild tech recession at the end of last year was as mild as previously thought and the economic recovery is already underway.”
He said the firm's forecast for economic recovery in 2024 and 2025 would be stronger than what the Bank of England expects.
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The agency predicts that inflation will fall further than the Bank of England expects „and interest rates will be cut faster than current market price recommendations”.
The shadow chancellor, Rachel Reeves, said Rishi Sunak „broke his promise to boost the economy, leaving Britain in recession and the figures show working people have paid the price. The Conservatives cannot say their plan is working or that they have turned the corner on more than 14 years of economic failure.
Jeremy Hunt said last year was „difficult” after interest rates were high to reduce inflation, „but we can see our plan is working”.
The chancellor added: “Inflation fell decisively from 11% to 3.4%, the economy grew in January and real wages rose for eight months in a row. Our cuts to National Insurance will boost growth by rewarding work and putting more than £900 a year in the pocket of the average earner.
„Oddany rozwiązywacz problemów. Przyjazny hipsterom praktykant bekonu. Miłośnik kawy. Nieuleczalny introwertyk. Student.