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

UK GDP shrinks in the second half due to the impact of rising rates and a rising standard of living. The government and analysts hope for a return to growth in 2024.

the British economy shrinks 0.3% In the last quarter of the year. Between July and September, British GDP actually fell by 0.1%, so the country experienced two consecutive quarters of declining GDP, and thus, entered into Technical stagnation. 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%.

the British economy shrinks 0.3% In the last quarter of the year. Between July and September, British GDP actually fell by 0.1%, so the country experienced two consecutive quarters of declining GDP, and thus, entered into Technical stagnation. 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%, which is a difficult number to use Rishi SunakPrime Minister, to boast that he kept his promise that the economy would grow in 2023.

According to data published this morning by the Office of National Statistics (ONS). High interest rates and rising standards of livingThat frozen consumption 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 around 0.1% and the Bank of England forecasting a recession.

in contrast, Euro-zone The economy managed to avoid a 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.

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Inflation is better than expected

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, there were no changes, as an increase of a tenth or twenty was expected due to the impact of increasing the ceiling on household energy bills, which is borne by the government. This factor was offset by the first drop in food prices since 2021.

The option of entering a technical recession was taken for granted by Sunak's government, but the Prime Minister himself recently made clear that it would be a matter of… 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.

Minister of Economy, Jeremy HuntHe said. “We already 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 a… Reduce rate At the beginning of summer, which will be an important relief for families.

Mortgages start to go down

Some of the effects of rising interest rates are beginning to become more subtle. For example Mortgage loans rose from 6% in the summer to about 4%-5% today. It is expected that, with greater control over inflation, Bank of England The European Central Bank may begin to ease its monetary policy in the coming months, after it raised interest rates from 0.1% to 5.25% in just a year and a half.

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the Recession in the second half of 2023 It's the first in the UK since the pandemic, although they don't compare, given that GDP at the time fell by 20% in just one quarter due to the global lockdown. “The latest data suggests so Business confidence has improved A little 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,” commented Director of Policy at the Institute of Directors, Roger Parker.

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