In 2023, Britain’s economy experienced a shallow recession, according to official figures released by the Office for National Statistics. This presents a challenge for Prime Minister Rishi Sunak as he tries to reassure voters of the safety and stability of the economy ahead of an expected election later in the year. GDP contracted by 0.1% in the third quarter and 0.3% in the fourth quarter of last year.
Despite these challenges, there are some positive signs. The Bank of England has hinted at the possibility of cutting interest rates as inflation approaches a point that would allow for such a move. However, official budget forecasters anticipate a 0.8% expansion this year while the economy is expected to grow by only 0.25%. Additionally, growth in households’ real disposable income and increased savings as the savings ratio rose slightly in the final quarter of last year are also positive indicators.
The opposition Labour Party has been quick to criticize Sunak for overseeing what they call “Rishi’s recession.” However, it’s important to note that Britain’s economy only grew by 0.1% in 2023, marking its weakest performance since 2009 during the global financial crisis, excluding the major setback in GDP caused by the pandemic in 2020. Despite this weak performance, there are still signs that Britain is on track to recover from the impact of COVID-19 pandemic.