Blow for Rishi Sunak as UK slips into recession ahead of elections this year

The world, on Thursday, woke up to the news of two countries sinking into recession. First, it was Japan, and later Office for National Statistics (ONS) announced that the UK had also slipped into a shallow recession in the second half of 2023.

The numbers highlighting the economic condition of the UK come as a major blow for Prime Minister Rishi Sunak before elections scheduled later this year.

The UK recession news also undercuts Sunak’s claim to be growing the economy in the run-up to the polls.

“Our initial estimate shows the UK economy contracted in the fourth quarter of 2023,” ONS director of economic statistics Liz McKeown said.

“While it has now shrunk for two consecutive quarters, across 2023 as a whole the economy has been broadly flat,” McKeown said, adding, “All the main sectors fell on the quarter, with manufacturing, construction and wholesale being the biggest drags on growth.”

What forced UK into recession?

High inflation and the cost-of-living crisis are said to be two factors that pushed the UK into recession.

The UK gross domestic product (GDP) shrank 0.3 per cent in the fourth quarter of 2023 after contracting 0.1 per cent in the prior three months.

These numbers have placed the UK’s economy in recession. Two successive quarters of contraction of GDP are typically considered the definition of a technical recession.

In reaction to the data, finance minister Jeremy Hunt said “High inflation is the single biggest barrier to growth”.

Also Read: Japan slips into recession, loses spot as world’s third-largest economy to Germany

Meanwhile, the crucial figures of the UK economy would increase pressure on the Bank of England which may cut interest rates from a 16-year high.

How UK’s recession can affect Sunak’s run to the polls?

It is the UK’s first recession since the start half of 2020 when the economy was slammed by fallout from the COVID-19 pandemic.

One of the five key pledges made by Sunak last year was improving the country’s economy.

As per the figure by the ONS, the UK stagnated in Sunak’s first full year as prime minister. Fourth quarter GDP was down 0.2 per cent compared to a year earlier and growth was just 0.1 per cent in 2023 as a whole.

The GDP numbers will possibly give the opposition a strong reason to attack the ruling Conservative government’s handling of the economy ahead of a general election that is expected to be held in the second half of 2024.

With inputs from agencies