Figures show recession ‘not as bad’ as first feared
THE recession the UK entered in the latter half of 2023 was slightly less severe than first thought, the Office for National Statistics revealed yesterday as it released revised figures.
The economy still shrunk for two quarters in a row, the definition of a recession, but the total contraction over that six-month period dropped from 0.5% to 0.4%.
This is because of a small revision to the fourth quarter where the rate of contraction fell to 0.31% from 0.34%.
Combined with the third quarter, unrevised when measured to two decimal places, that left a slightly lower headline figure, the ONS said.
“Our updated set of GDP figures shows quarterly growth unrevised across 2023, with a little growth in the first quarter and small contractions in the latter half of the year,” said ONS director of economic statistics Liz McKeown.
“New figures on households show that savings remained high, with an increase in income in the last quarter of the year.”
Rob Wood, the chief UK economist at Pantheon Macroeconomics, said that while the new figures mean the UK was in a “technical recession”, it is still possible later revisions to the numbers will undo this.
He added: “The recession was driven by consumers saving more in response to higher interest rates and fears about the impact on the economy.”
Across the whole of last year, GDP is thought to have risen 0.1%, the worst performance since the 2009 financial crisis if the pandemic year of 2020 is excluded.
When measuring real GDP per person, it is estimated to have fallen by 0.6% in the fourth quarter, and has not grown since the first threemonth period of 2022.
That is because the population has grown faster than GDP. In 2023, GDP per person is estimated to have dropped 0.7%.
Jeremy Hunt insisted the economy had grown last year “albeit at a very slow rate” when asked if the latest GDP figures meant Rishi Sunak had failed in his pledge to grow the economy.
The Chancellor Jeremy Hunt said: “The Prime Minister’s pledge last year was to halve inflation and he delivered on that. In fact inflation has fallen from over 11% to 3.4%. Having done that he then said we would grow the economy.
“I don’t think any of us were expecting the economy to actually grow last year, the Bank of England wasn’t, the Office for Budget Responsibility wasn’t, in fact it did, albeit at a very slow rate.
“That is a testament to the resilience of the economy but also the fact the government took some very difficult decisions early on to make sure we got the economy back on track.”