Official data released on Thursday, February 15, 2024, revealed that Britain has entered a recession, posing further challenges for Prime Minister Rishi Sunak and his Conservative party, who are expected to face a tough general election this year.
The Office for National Statistics (ONS) reported that Gross Domestic Product (GDP) contracted by 0.3% in the fourth quarter of 2023, following a 0.1% decline in the previous quarter, thus meeting the technical definition of a recession, characterised by two consecutive quarters of GDP decline.
Despite economists' forecasts suggesting the recession could be short-lived, the news represents a significant setback for Sunak, who has noted economic growth as a priority.
The timing is particularly unfavorable for the Conservatives, who trail behind the Labour party in opinion polls.
The announcement coincides with two by-elections, where the Conservatives are apprehensive about losing previously secure constituencies in Wellingborough, central England, and Kingswood in the southwest.
Capital Economics analyst Ruth Gregory noted that while the recession is a setback for the prime minister, it is relatively mild, and leading indicators suggest it may be nearing its end.
The downturn in GDP was widespread, with all major sectors experiencing contraction, particularly manufacturing and construction.
Overall, the economy remained flat in 2023 with a mere 0.1% expansion, a stark drop from the 4.6% growth seen in 2022.
Meanwhile, Finance Minister Jeremy Hunt acknowledged the challenges posed by high inflation, currently at 4.0%, double the Bank of England's target rate.
He emphasised the importance of adhering to the government's plan, which includes tax cuts to stimulate economic growth.
However, Labour's finance spokeswoman Rachel Reeves criticised the government's economic management, attributing the recession to Sunak's policies and asserting that his promise of delivering growth lies in ruins.
Despite a decline in UK inflation from its peak in October 2022, energy and food prices remain elevated, posing ongoing challenges for households and businesses.