UK economy enters recession in second half of 2023 after shrinking 0.30 per cent

Britain’s economy slipped right into a recession in the course of the latter half of 2023, contracting by a extra significant-than-anticipated 0.3 per cent in the three months main as much as December.

The 0.3 per cent contraction in Britain’s economy from October to December got here after a 0.1 per cent decline between July and September. This development went in opposition to the expectations of economists surveyed by Reuters, who had anticipated a smaller 0.1 per cent GDP decline for the October-to-December interval.

Despite this, the Bank of England stays optimistic about 2024, foreseeing a rebound in development. However, any gradual efficiency may affect Prime Minister Rishi Sunak’s efforts to realize voter assist earlier than an anticipated nationwide election later in the yr.

The Office for National Statistics reported a 0.1 per cent decline in financial output for December, opposite to analysts’ expectations of a 0.2 per cent lower.

Following the discharge of the GDP information, the British pound skilled a reasonable weakening in opposition to each the greenback and the euro, reflecting market reactions to the financial downturn. 

The British economy has slipped into recession for the primary time for the reason that preliminary half of 2020, when it suffered a major downturn as a result of COVID-19 pandemic. This downturn presents a problem for the ruling Conservative Party, particularly with a looming normal election and trailing behind the Labour Party in polls.

There’s anticipation that Prime Minister Rishi Sunak will set the election date. Amidst these financial woes, hopes are pinned on the Bank of England to provoke rate of interest cuts as inflation is at the moment double the goal at 4 per cent.

However, the central financial institution is exercising warning, cautious that lowering rates of interest too swiftly may reignite inflationary pressures, regardless of having beforehand raised charges aggressively to fight hovering inflation, which peaked at greater than 11 per cent in the previous yr.

(With agency Inputs)