UK economy entered recession in second half of 2023

The UK economy entered a technical recession in second half of 2023, after recording two consecutive quarters of negative growth, the Office of National Statistics (ONS) has confirmed.

The latest Gross Domestic Product (GDP) figures from the ONS reveal the UK economy contracted by 0.3% in the three months from October to December 2023, following a 0.1% contraction in the previous quarter. All three sectors of the economy reported declines in output in Q4 of 2023, with services contracting 0.2%, production down 1.0% and construction output down 1.3%. Both household spending and government spending also recorded a decline during the final three months of the year.

News that the UK economy has dipped into recession follow a year of stagnant economic growth, with the strongest performing quarter (January to March 2023) seeing just 0.2% growth. Forecasts for the UK economy looking ahead, however, continue expect to see modest growth during the first quarter of 2024.

Despite entering a recession (defined as two consecutive quarters of contraction in the economy), the UK economy remains 0.1% larger than at the end of 2022, but represents a significant slowdown in annual growth compared to the 4.3% growth recorded over 2022 as the economy rebounded from the Covid-19 pandemic.

Elsewhere in the world, other major economies have also revealed similarly difficult economy pictures. The Japanese government has revealed that the country also entered a recession after recording -0.4% growth from October to December 2023, with the nation’s output falling behind Germany to become the fourth largest global economy as a result of weak performance of its currency. Europe’s largest economy, Germany, meanwhile, has narrowly avoided a recession but saw its economy shrink 0.3% in the last three months of the year also.

Publication of the latest GDP data follows more positive economic news from 14th February, which saw ONS inflation figures hold at 4.0%, bucking widely held forecasts that it would rise as a result of January increases to energy bills.