Newly released figures show the UK economy entered a technical recession as 2023 ended – defined by two consecutive periods in which the economy contracts.
UK GDP (gross domestic product) figures, a key measure of economy growth, show the economy contracted by 0.3% in the final three months of 2023, according to the Office for National Statistics (ONS). This is a slightly bigger fall than predicted by economists and follows a 0.1% shrink in the period from July to September.
The fall mirrors weakness seen across all three major sectors of the economy, with services output falling 0.2% quarter-on-quarter, construction output falling 1.3%, and production falling 1% quarter-on-quarter.
The technical recession is, however, expected to be shallow and short lived.
Anna Leach, deputy chief economist, CBI, said: “December’s GDP number suggests that the UK narrowly fell into a technical recession in the second half of the year. This brings to a close a pretty stagnant year for UK economic growth.
“The CBI’s most recent surveys suggest this year has started better than last year ended, with expectations for services and manufacturing in positive territory and the drag from higher interest rates expected to diminish.
“Better-than-expected real earnings growth will support consumers against the headwind of higher interest rates. But firms remain under pressure from higher borrowing costs, higher prices, weak demand and ongoing challenges recruiting the workers they need to grow and invest.
“There are multiple growth opportunities across the UK economy this year. As we head towards the Budget in March, we’re looking for action to support labour market participation and investment so that opportunities in high-growth industries like net zero can be fully realised.”
