The British economy is entering a recession after declining by 0.3% in the last quarter of 2023

The UK economy contracted by 0.3% in the last quarter of the year. Between July and September, British GDP actually fell by 0.1%, meaning that the country experienced two consecutive quarters of declining GDP and thus entered a technical recession. Between October and December, construction fell by 1.3%; Industrial production is 1%, and services, which constitute two-thirds of the entire British economy, are 0.2%.

Over the entire year, the country's economy rose by 0.1%, a figure that Prime Minister Rishi Sunak will not use. To brag that he kept his promise that the economy would grow in 2023.

According to data published this morning by the National Bureau of Statistics, the rise in interest rates and rising standards of living, which led to a freeze in consumption, They are the main causes of recession. The data for the October-December period was surprising because it was negative, with analysts expecting a cut of about 0.1%. The Bank of England predicted a recession.

In contrast, the Eurozone was able to avoid recession after growing by 0.1% in the last quarter. GDP advanced 0.5% in 2023. In Spain, the economy grew 0.6% in the fourth quarter and 2.5% in the year, according to Eurostat.

The UK figures became known the day after January inflation was published, in this case with a better-than-expected performance. Prices remained at 4% annually last month, without any changes, while they were expected to rise by one or two tenths due to the impact of the increase in the maximum energy bills for homes., which is paid by the government. This factor was offset by the first drop in food prices since 2021.

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The Sunak government took for granted the option of entering a technical recession, But the Prime Minister himself recently made clear that this would be a short and moderate decline in GDP. In fact, various published reports predict an increase in GDP already in the first quarter of the year.

said Treasury Secretary Jeremy Hunt. “We actually expected growth to be weaker because we prioritized controlling inflation. The economy is more resilient than many expected: Inflation is falling [llegó a estar en el 11% hace poco más de un año] Salaries have risen above the inflation rate for six months. “If we continue this, analysts expect interest rates to be cut at the beginning of the summer, which will be an important relief for families.”

Some of the effects of rising interest rates are beginning to become more subtle. For example, mortgage rates rose from 6% in the summer to about 4% to 5% today. It is expected that the Bank of England, with more control over inflation, will be able to start easing its monetary policy In the coming months, after raising interest rates from 0.1% to 5.25% in just a year and a half.

The recession in the second half of 2023 is the first in the United Kingdom since the pandemic, although there is no comparison between them, Considering that the GDP at that time fell by 20% in just one quarter due to the global lockdown. The Institute of Directors' Policy Director commented: “The latest data suggests that business confidence has improved slightly in recent weeks. It is important that this progress is driven by the policies and decisions of the Chancellor of the Exchequer and the Bank of England.” , Roger Parker.

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