The UK economy is falling into recession

The British economy fell into recession in the second half of 2023, a difficult context for the Prime Minister Rishi SunakWhich promised to boost growth ahead of elections scheduled for later this year. GDP contracted by a worse-than-expected 0.3 percent in the last quarter, after shrinking by 0.1 percent between July and September, according to official data.

the Sterling pound Weakened against the dollar and the euro. Investors have increased their bets that the Bank of England will cut interest rates this year and companies have asked for more help from the government in the budget plan due on March 6.

“Companies have already stopped being delusional about the difficulties they face, and this is undoubtedly news It will sound the alarm for the governmentsaid Alex Fitch, Director of Policy and Knowledge at the British Chambers of Commerce.

Minister of Economy, Jeremy HuntHe said there were “signs that the British economy is at a turning point” and that “we must stick to the plan: cut business and business taxes to build a stronger economy.” According to media reports, Hunt intends to cut billions of pounds from public spending plans to fund pre-election tax cuts in his budget, if he faces financial difficulties.

According to the UK Office for National Statistics (ONS), the economy was expected to grow by 0.1% in 2023 compared to 2022. Bank of England He said that He expected production to rebound Slightly in 2024, but with a growth of only 0.25%. The reality is that the British economy has been stagnant for almost two years, although recessions in the country have become less frequent as the economy has grown and matured.

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The worst streak recorded since 1955

The COVID-19 pandemic caused the deepest contraction in two quarters in early 2020. Before that, the global financial crisis sparked a severe recession that lasted just over a year, from the second quarter of 2008 to the second quarter of 2009.

Data on Wednesday showed that inflation remained at a lower than expected level of 4% in January, sparking talk among investors about… Reduce rate Bank of England for June. But the strong wage growth also recorded on Tuesday shows why the Bank of England remains cautious.

The decline in GDP in the fourth quarter was the largest since the first three months of 2021, when Britain imposed new restrictions. Covid-19. The Office for National Statistics said economic output fell by 0.1% month-on-month in December after growth of 0.2% in November. It also shows that it was the manufacturing, construction and wholesale sectors that contributed most to the decline in GDP in the last three months of last year.

GDP per capita fell in every quarter last year and has not grown since early 2022, leading to… Longest losing streak ever Since the data exist (1955).

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