While it’s no secret that the past year has been financially turbulent for the UK, new data has now revealed that the region actually fell into recession in the final three months of last year after the economy continued to suffer.
According to the Office for National Statistics (ONS), the UK’s gross domestic product (GDP) fell by an estimated 0.3 percent, following a fall of 0.1 percent in the previous quarter. This is the second quarter in a row in which there has been a decline, so one can speak of a recession.
Although the economy grew by 0.1 percent throughout 2023, the annual growth rate remained at the weakest level since 2009, the year of the global financial crisis.
The ONS attributed the recent declines to a fall in net trade, household spending and government consumption over the period, which was only “partially offset by an increase in gross fixed capital formation”.
Negative contributions to growth came from manufacturing, construction and the services sector, with the latter sector declining by an estimated 0.2 percent, marking the third consecutive quarter of decline.
Wholesale and retail were the largest contributors to the decline in overall services, down 0.6 percent, with wholesale falling 1.3 percent and retail falling 0.9 percent.
Previously, the United Kingdom’s Office for Statistics (ONS) reported in December 2023 that the UK experienced the largest monthly decline in retail sales since January 2021, when pandemic restrictions came into force.
Inflation remains broadly stable
Efforts to turn around the UK economy were among Prime Minister Rishi Sunak’s top five promises when he took office in 2022. But high inflation, escalating energy costs and the decline in consumer purchasing power remain the biggest problem children.
While inflation hit a record high in 2022 and has slowly recovered since then, new Consumer Price Index data shows that inflation has remained below the expected four percent, with discounts offered by retailers among the factors encouraging shoppers to: inside during the Christmas season.
“With headline inflation not falling for the second month in a row, there is no reason for complacency,” said Kris Hamer, director of insight at the British Retail Consortium. “The government should recognize the cumulative impact of its policies – from increases in corporate taxes to the new packaging levy – at a time when minimum wages are rising at an all-time high and border controls are being introduced. If these costs continue to rise unabated, it is inevitable that they will have an impact on the prices households pay.”
This translated post previously appeared on FashionUnited.uk