Britain’s economy saw a shallow recession last year, official figures confirmed on Thursday, leaving Prime Minister Rishi Sunak with a challenge to reassure his voters that the economy is safe with him before an expected election later this year. The country’s GPD shrank by 0.1% in the third quarter and by 0.3% in the fourth from the preliminary estimates, the Office for National Statistics said on Thursday.
The figures will be quite disappointing for Sunak, who has been accused by the opposition Labor Party far ahead of overseeing ‘Rishi’s recession.’ Martin Beck, chief economic advisor at EY ITEM Club, said “The weak starting point for GDP this year means calendar-year growth in 2024 is likely to be limited to less than 1%,”
Britain’s economy has shown signs of starting the year on a stronger footing, with monthly GDP growing at 0.2% in January and unofficial surveys suggesting growth continuing in February and March.
Tax cuts announced by Finance Minister Jeremy Hunt and expectations of interest rate cuts are likely to help the economy in 2024. However, Britain is one of the slowest countries 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 the Group of Seven nations.
The economy grew just 0.1% in all of 2023, its weakest performance since 2009, excluding the peak-pandemic year of 2020. The Bank of England has said inflation is moving towards the point where it can start cutting the rates. It expects the economy to grow just by 0.25% this year, although the official budget forecasters expect a 0.8% expansion.
BoE policymaker Jonathan Haskel stated in an interview in Thursday’s Financial Times that rate cuts were a “long way off” despite dropping his advocacy of a rise at last week’s meeting.
