UK economy falls into recession
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THE United Kingdom’s (UK) economy fell into a recession in the second half of 2023.
This is coming ahead of this year’s expected election for Prime Minister Rishi Sunak, who has promised to boost growth.
According to official data, Britain’s Gross domestic product (GDP) contracted by 0.3 percent in the three months to December, having shrunk by 0.1 percent between July and September.
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The fourth-quarter contraction was reported to be deeper than all economists’ estimates in a Reuters’ poll, which had pointed to a 0.1 percent decline.
Sterling weakened against the dollar and the euro while investors added to their bets on the Bank of England (BoE) cutting interest rates this year and businesses called for more help from the government in a budget plan due on March 6.
Thursday’s data meansBritain joins Japan among the group of seven advanced economies in a recession, although it is likely to be short-lived and shallow by historical standards, while Canada has yet to report GDP data for the fourth quarter.Britain’s economy stands just one percent higher than its level of late 2019, before the COVID-19 pandemic struck, with only Germany among G7 countries, faring worse.
His Conservative Party has dominated British politics for much of the past seven decades, with a reputation for economic competence. However, opinion polls show that Labour is now more trusted with the economy.
The development means that the British households are due to see their first drop in living standards between one national election and the next since the Second World War, analysts have said.
Deputy Chief UK Economist at Capital Economics, Ruth Gregory, said the GDP figures had more political significance than economic, with voters due to elect lawmakers in two constituencies on Thursday.
Gregory said: “The news that the UK slipped into technical recession in 2023 will be a blow for the Prime Minister on a day when he faces the prostions”of losing two by Finance Minister, Jeremy Hunt, said there were “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,” but the opposition Labour Party has rejected those claims.
Rachel Reeves, Labour’s top economy official 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 Conserva-tives.”
Media reports said Hunt was seeking to cut billions of pounds from public spending plans to fund pre-election tax cuts in his budget, if penned in by tight finances.
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By Joseph Inokotong, Chima Nwokoji and Agency reports
https://www.msn.com/en-xl/africa/other/uk-economy-falls-into-recession/ar-BB1imLiM