The recession that hit Britain’s economy in the second half of 2023 presented a challenging environment for Prime Minister Rishi Sunak, who has pledged to accelerate growth in front of the anticipated 2024 election.

The gross domestic product (GDP) shrank by 0.1% between July and September, but then by a worse-than-expected 0.3% in the three months leading up to December, according to the Office for National Statistics (ONS).

Economists surveyed by Reuters had predicted a less significant 0.1% decline from October to December. According to the ONS, the fourth-quarter GDP decline was the largest since the first quarter of 2021.

The economy of Britain has not expanded in almost two years. According to the Bank of England, it should start to increase modestly in 2024.

“Businesses were already under no illusion about the difficulties they face, and this news will no doubt ring alarm bells for government,” Alex Veitch, director of policy and insight at the British Chambers of Commerce, said.

“The chancellor must use his budget in just under three weeks’ time to set out a clear pathway for firms and the economy to grow.”

According to Jeremy Hunt, the finance minister, there are “signs the British economy is turning a corner” and “we must stick to the plan – cutting taxes on work and business to build stronger economy.”

According to media sources, if constrained by tight funds, Hunt was looking to remove billions of pounds from public expenditure plans in order to fund pre-election tax cuts in his budget, which was due on March 6.

According to the ONS, economic output decreased by 0.1% on a monthly basis in December following a 0.2% increase in November. A 0.2% decline was predicted by the Reuters poll for December.
Not long after the release of the GDP figures, sterling saw a little decline in value relative to the dollar and the euro.

The construction, manufacturing, and wholesale industries were the main drivers of the decline in GDP. 

(Adapted from ChannelNewsAsia.com)

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