UK enters recession – GDP shrinks by 0.3%

The UK has entered a recession with gross domestic production (GDP) shrinking by 0.3% in the final three months of 2023, which followed a 0.1% contraction in the July-September period – according to the Office for National Statistics.

The news comes at bad time for builders’ merchants as construction output is expected to fall by 2.1% and also Prime Minster Rishi Sunak, with one of his key pledges being to generate economic growth.

“All the main sectors fell on the quarter, with manufacturing, construction and wholesale being the biggest drags on growth, partially offset by increases in hotels and rentals of vehicles and machinery,” ONS director of economic statistics Liz McKeown said in a statement.

A recession is defined as two consecutive three-month periods where the economy contracts rather than grows.

In response to the announcement, chancellor Jeremy Hunt said: “High inflation is the single biggest barrier to growth which is why halving it has been our top priority. While interest rates are high – so the Bank of England can bring inflation down – low growth is not a surprise.

“But there are signs the British economy is turning a corner; forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low. Although times are still tough for many families, we must stick to the plan – cutting taxes on work and business to build a stronger economy.”