While it is no secret that the past year has proven to be a financially turbulent one for the UK, new data has revealed that the region had in fact fallen into recession during the final three months of last year, as the economy continued to take a hit.
According to figures by the Office for National Statistics (ONS), the UK’s gross domestic product (GDP) was estimated to have fallen 0.3 percent, down from a 0.1 percent decline the quarter prior. It marks the second consecutive quarter to experience a decrease and therefore qualifies for the status of a recession.
This comes despite the economy growing by 0.1 percent for the entirety of 2023, yet the annual growth rate remained at its weakest level since 2009, when there had been a global financial crisis.
ONS accredited the most recent declines to a fall in the volume of net trade, household spending and government consumption over the period, which it said was only “partially offset by an increase in gross capital formation”.
In terms of output, there had been negative contributions to growth from production, construction and services, the latter of which was estimated to have fallen by 0.2 percent, marking the third consecutive quarter to have seen a decline.
The wholesale and retail trade was highlighted as one of the largest contributors to the fall in total services at a 0.6 percent decline, with a 1.3 percent hit on wholesale while retail took a 0.9 percent hit.
It follows an ONS report in December 2023 that said the UK had witnessed the largest monthly decrease in retail sales since January 2021, when the pandemic restrictions had been put in place.
Inflation remains, for the most part, stable
Efforts to turn around the UK economy were a part of prime minister Rishi Sunak’s five key pledges when he took on the helm position back in 2022. Yet high inflation, escalating energy bills and a fall in consumer spending power have all remained at the height of concern.
However, while inflation hit record highs in 2022, and has slowly improved since, new data from CPI showed that inflation had remained at a lower-than-expected 4 percent, with discounts by retailers being among the factors cited as helping shoppers over the Christmas period.
Responding to the figures, Kris Hamer, director of insight of the British Retail Consortium, said in a release: “With the headline inflation rate failing to fall for the second consecutive month there is no space for complacency.
“Government should recognise the cumulative impact of their policies – from rises in business rates to its new packaging levy – at a time when minimum wages are seeing the biggest rise on record and border checks are being implemented. Ultimately, if these costs continue rising unabated, it is inevitable that they will filter back into the price paid by households.”
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