The UK economy entered a technical recession at the end of 2023 by chaining two consecutive quarters of contraction, with a decline in GDP of 0.3% from October to December, the National Statistics Office (ONS) reported this Thursday..
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This decline in gross domestic product (GDP) in the last three months of the year was added to the 0.1% drop between July and Septemberindicated the organization, when announcing the first of two calculations.
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High interest rates and inflation have put pressure on the economy of households and businesses, which, in the middle of an election year, complicates the task of the conservatives in power.
Two straight quarters of economic contraction are often considered by economists to be the definition of a “technical” recession.
The ONS noted that, Despite registering a technical recession in that period, the economy grew 0.1% compared to 2022.
In the third quarter of 2023 there were contractions in the main economic sectors, with a fall of 0.2% in services, 1% in industrial production and 1.3% in construction.
There was a decline in the volume of net trade and spending by both the Government and households, the ONS noted..
The office added that the recession was caused mainly by the poor results of businesses in December, in the middle of the Christmas season and traditionally the busiest time of the year for this sector.
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It is the first time that the United Kingdom has entered a recession since it did so in the first half of 2020, due to the effects of the pandemic. At that time, lockdowns to combat the coronavirus pandemic affected economic activity for months.
The ONS notes that The British economy “is recording its worst performance since the 2009 crisis, not counting 2020”.
The data represents a blow, in a general election year, for Conservative Prime Minister Rishi Sunak, who promised to grow the economy as one of his five priorities.
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After hearing the results, the Minister of the Economy, Jeremy Hunt, said that Low growth “not a surprise” as long as the Bank of England keeps interest rates high to lower inflation.
“Inflation is the biggest obstacle to growth, so reducing it by half has been our priority,” commented the Minister of Economy.
Inflation in the United Kingdom stands at 4%, still double the Bank of England's target, but has fallen from the 11% reached in October 2022.
“With interest rates high – currently 5.25% – for the Bank of England to reduce inflation, the weak growth is not a surprise,” Hunt continued.
Inflation is the biggest obstacle to growth, so halving it has been our priority.
“But there are signs that the British economy has turned a corner and the forecasts speak of growth for the coming years,” said the minister.
Labor Economy spokeswoman Rachel Reeves said Rishi Sunak's promise to grow the economy was now in tatters.
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The head of the Government “can no longer say that his plan works”declared Reeves, who defended that only his party “has a long-term plan for more jobs, more investment and reduced bills.”
Economists downplay the scope of this recession.
“It is moderate and the main indicators suggest that it is already coming to an end,” said economist Ruth Gregory of Capital Economics in a statement.
But Gregory clarified that “the announcement that the United Kingdom has entered a technical recession in 2023 will be a blow to the conservative prime minister,” Rishi Sunak.
Labor currently has a clear lead in the polls over the Conservatives, in power for about 14 years, ahead of this year's election, which still has no date.
INTERNATIONAL EDITORIAL
*With information from EFE and AFP
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