UK enters recession amid spending slump, strikes
The UK economy contracted by 0.3% in the last quarter of the year, marking a recession after a previous contraction between July and September, according to official data.
This downturn challenges Prime Minister Rishi Sunak's economic growth pledge made last January. Despite the lack of a public metric to measure this commitment, the economy's shrinkage by 0.1% in the third quarter indicates the pledge has not been met. Overall, the UK economy grew by a mere 0.1% in 2023, its weakest performance since 2009 excluding the pandemic years.
Shadow Chancellor Rachel Reeves criticized the government's economic strategy, stating that Sunak's growth promise is now in ruins. The recession reflects broader economic pressures, with the European Union narrowly avoiding a recession and Japan confirming a contraction for the second consecutive quarter.
The Office for National Statistics cited reduced consumer spending, health sector strikes, and a decrease in school attendance as factors contributing to the economic decline. Despite these challenges, Treasury sources suggest Chancellor Jeremy Hunt is considering further public spending cuts to allow for tax reductions in the upcoming budget.
Prime Minister Sunak emphasized tackling inflation as a priority over immediate economic growth, highlighting the economy's resilience, low unemployment, and rising real wages. However, with inflation still double the Bank of England's target, the UK faces a "mild recession," according to experts. Businesses, especially in construction, experienced a turbulent year, but there are signs of cautious optimism for recovery.
