Official data shows UK economy slipping into recession | Business and business news

Britain's gross domestic product contracted 0.3 percent in the final three months of 2023, after contracting 0.1 percent in the third quarter.

The United Kingdom slipped into a technical recession in the second half of last year after its economy posted two consecutive quarters of negative growth, official figures show.

The Office for National Statistics (ONS) said in a statement on Thursday that Britain's gross domestic product (GDP) contracted by 0.3 percent in the final three months of 2023, after shrinking by 0.1 percent in the third quarter .

A technical recession is usually defined as consecutive quarters of contracting GDP.

Sterling weakened slightly against the US dollar and the euro shortly after the release of the GDP data.

The ONS said the fall in GDP in the fourth quarter of 2023 was the sharpest since the first three months of 2021. A Reuters poll of economists had pointed to a smaller decline of 0.1 percent in the October-December period.

Economic output fell 0.1 percent monthly in December, following growth of 0.2 percent in November, the ONS said. The Reuters survey showed a decline of 0.2 percent in December.

The British economy has been stagnating for almost two years. The Bank of England has said it expects a slight increase in 2024, but slow growth this year would still present a difficult environment for Prime Minister Rishi Sunak's attempts to win over voters ahead of national elections later expected in 2024.

“Businesses were already under no illusions about the difficulties they face and this news will undoubtedly set off alarm bells for the government,” said Alex Veitch, director of policy and insight at the British Chambers of Commerce.

“With his budget in just under three weeks, the Chancellor must set a clear course for the growth of companies and the economy.”

Chancellor of the Exchequer Jeremy Hunt said there were “signs that the UK economy is turning around” and “we must stick to our plan – cut taxes on work and businesses to build a stronger economy”.

Media reports said Hunt wanted to cut billions of pounds from public spending plans in his March 6 budget to fund pre-election tax cuts if tight finances prevented this.