Britain\u2019s economy entered a shallow recession last year, official figures confirmed on Thursday, leaving Prime Minister Rishi Sunak with a challenge to reassure voters that the economy is safe with him before an election expected later this year.
\nGross domestic product shrank by 0.1% in the third quarter and by 0.3% in the fourth, unchanged from preliminary estimates, the Office for National Statistics (ONS) said on Thursday.
\nThe figures will be disappointing for Sunak, who has been accused by the opposition Labour Party \u2013 far ahead in opinion polls \u2013 of overseeing \u201cRishi\u2019s recession\u201d.
\n\u201cThe weak starting point for GDP this year means calendar-year growth in 2024 is likely to be limited to less than 1%,\u201d said Martin Beck, chief economic advisor at EY ITEM Club.\u201d
\n\u201cHowever, an acceleration in momentum this year remains on the cards.\u201d
\nBritain\u2019s economy has shown signs of starting 2024 on a stronger footing, with monthly GDP growth of 0.2% in January, and unofficial surveys suggesting growth continued in February and March.
\nTax cuts announced by finance minister Jeremy Hunt and expectations of interest rate cuts are likely to help the economy in 2024.
\nHowever, Britain remains one of the slowestcountries to recover from the effects of the COVID-19 pandemic. At the end of last year, its economy was just 1% bigger than in late 2019, with only Germany faring worse among Group of Seven nations.
\nThe economy grew just 0.1% in all of 2023, its weakest performance since 2009, excluding the peak-pandemic year of 2020.
\nGDP per person, which has not grown since early 2022, fell by 0.6% in the fourth quarter and 0.7% across 2023.
\nSterling GBP=was little changed against the dollar and the euro EURGBP=after the data release.
\nUK RECOVERY BEGINS SLOWLY
\nThe Bank of England (BoE) has said inflation is moving towards the point where it can start cutting rates. It expects the economy to grow by just 0.25% this year although official budget forecasters expect a 0.8% expansion.
\nBoE policymaker Jonathan Haskel said in an interview reported in Thursday\u2019s Financial Times that rate cuts were \u201ca long way off\u201d, despite dropping his advocacy of a rise at last week\u2019s meeting.
\nThursday\u2019s figures from the ONS also showed 0.7% growth in households\u2019 real disposable income, flat in the previous quarter.
\nThomas Pugh, an economist at consulting firm RSM, said the increase could prompt consumers to increase their spending and support the economy.
\n\u201cConsumer confidence has been improving gradually over the last year \u2026 as the impact of rising real wages filters through into people\u2019s pockets, even though consumers remain cautious overall,\u201d Pugh said.
\nBritain\u2019s current account deficit totalled 21.18 billion pounds ($26.70 billion) in the fourth quarter, slightly narrower than a forecast of 21.4 billion pounds shortfall in a Reuters poll of economists, and equivalent to 3.1% of GDP, up from 2.7% in the third quarter.
\nThe underlying current account deficit, which strips out volatile trade in precious metals, expanded to 3.9% of GDP.
\n($1 = 0.7933 pounds)
\n(Reuters)recession. shallow recession, GDP growth, inflation<\/p>\n","protected":false},"excerpt":{"rendered":"
Britain’s economy entered a shallow recession last year, with GDP shrinking by 0.1% in the third quarter and 0.3% in the fourth. The economy is expected to grow by just 0.25% this year, with inflation moving towards the point where the Bank of England can start cutting rates. Household real disposable income grew by 0.7%, prompting consumers to potentially increase spending and support the economy. The current account deficit in the fourth quarter was 21.18 billion pounds, equivalent to 3.1% of GDP.<\/p>\n","protected":false},"author":5,"featured_media":5973,"comment_status":"open","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[1902,47,195,1766,1498,3769,2021,432,2369,260,26,1600,3251,1626,599,1312,2515,569,518,848,696,60,576,3767,2294,1823,67,899,374,1125,839,1346,2836,634,3138,1215,1792,3886,1354,1958,4022,3480,3814,1123,3773,1358,1065,3358,1006,494,3885,1379],"class_list":["post-5972","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-other","tag-bank","tag-bank-of-england","tag-britain","tag-budget","tag-confidence","tag-consumer-confidence","tag-consumers","tag-covid","tag-data","tag-dollar","tag-economy","tag-election","tag-england","tag-eurgbp","tag-euro","tag-expansion","tag-february","tag-finance","tag-finance-minister","tag-gbp","tag-gdp","tag-gdp-growth","tag-germany","tag-growth","tag-income","tag-increase","tag-inflation","tag-interest","tag-interest-rate","tag-interest-rate-cuts","tag-labour","tag-meeting","tag-office-for-national-statistics","tag-opinion","tag-performance","tag-poll","tag-prime-minister","tag-recession","tag-release","tag-rishi-sunak","tag-shallow-recession","tag-spending","tag-statistics","tag-sterling","tag-sunak","tag-support","tag-tax","tag-tax-cuts","tag-trade","tag-uk","tag-uk-economy","tag-voters"],"acf":{"keyphrase":"","keywords":"","sourceimg":"","country-category":""},"yoast_head":"\n