Is Britain Falling into Recession?; Here's what you need to know

The UK economy fell into recession in the second half of 2023, with GDP contracting by 0.3% from October to December and by 0.1% between July and September.

London: The United Kingdom's economy under Prime Minister Rishi Sunak fell into recession in the second half of 2023, ahead of elections expected later this year, Reuters reported on Thursday. The country's GDP contracted 0.3 percent from October to December and 0.1 percent from July to September, which is considered worse than expected.

Response from the British Chancellor of the Exchequer

UK Chancellor of the Exchequer Jeremy Hunt said there are “signs the UK economy is turning a corner” and “we must stick to the plan – cutting taxes on work and business to create a stronger economy to build.”

According to Reuters reports, Jeremy Hunt planned to cut billions of pounds from government spending to fund tax cuts in his pre-election budget if this were to happen due to tight finances.

The economy's growth rate was just 0.1 percent in 2023 compared to 2022, the Office of National Statistics (ONS) said. The Bank of England (BoE) has said it expects output to pick up slightly in 2024, but only by 0.25 percent growth.

Why is Britain in a recession?

Although recessions have become less frequent in Britain as the country's economy has become larger and more developed, the country's economy has been in a state of recession for the past two years. In early 2020, the COVID-19 epidemic caused the longest contraction ever recorded, lasting two quarters. Before that, from the second quarter of 2008 to the second quarter of 2009, a severe recession lasted just over a year, caused by the global financial crisis.

The fall in GDP in the fourth quarter was the biggest since the UK government introduced new COVID-19 restrictions in the first three months of 2021. In other news, the Japanese economy also shrank unexpectedly, causing the country to enter a recession and lose its position as the most important country. third largest economy in the world after Germany.
The Cabinet Office said on Thursday that gross domestic product shrank by 0.4% on an annual basis in the last three months of 2023, following a contraction in the previous quarter.

(With input from agencies)