The UK has entered a technical recession, with the Office for National Statistics revising economic contraction figures. Chancellor Rishi Sunak faces scrutiny over economic performance, while opposition voices call for change.
The UK economy contracted in the latter part of 2023, entering a technical recession as revealed by the latest revisions from the Office for National Statistics (ONS). The updated figures show a less severe economic downturn than initially reported; the economy shrank by 0.3% in the final quarter of 2023, instead of the previous estimate, marking two consecutive quarters of contraction. This adjustment revises the total contraction over the six-month period to 0.4%, slightly improving from an earlier estimate of 0.5%. Chancellor Rishi Sunak faces criticism as this economic performance falls short of his growth pledges, amidst other challenges including NHS waiting lists and small boat migration.
Despite the recession, Chancellor Jeremy Hunt expressed optimism, attributing positive aspects such as reduced inflation, rising real wages, and the impact of National Insurance tax cuts as factors that will stimulate future growth. The Office of Budgetary Responsibility forecasts a recovery with growth expected to hit 1.9% next year.
Labour’s Shadow Chancellor, Rachel Reeves, called out Sunak for not achieving economic growth, highlighting a period of what she describes as economic failure under the Conservative leadership. She advocates for Labour’s long-term economic plan. The political pressure on Sunak is intensifying from within his party and the opposition, amid growing calls for an election.
Liz McKeown of the ONS noted the revised GDP figures showed consistent quarter-on-quarter growth throughout 2023, with a marginal increase in income in the last quarter. Analyst Rob Wood suggested that the downturn was influenced by increased consumer savings due to higher interest rates, indicating economic challenges beyond immediately visible contractions. Despite the GDP potentially rising by 0.1% over 2023, marking it as the weakest performance since the 2009 financial crisis aside from the pandemic year of 2020, Liberal Democrat Treasury spokeswoman Sarah Olney criticized the Government for the state of the economy. Nonetheless, Chancellor Hunt defended the government’s economic strategies, stating they are beginning to yield results.
The economic landscape of the UK remains a significant concern for policymakers and analysts, underlined by the need for equitable and sustainable growth strategies amidst ongoing global uncertainties.
