The UK economy entered into a recession at the end of 2023 after contracting by 0.3 per cent in the final three months of the year, according to data from the Office for National Statistics (ONS).
The new figures mean the UK has now met the technical definition of a recession, with two quarters of economic contraction.
The confirmation of a recession represents a set back for prime minister Rishi Sunak, who pledged at the start of 2023 to “grow the economy”.
Speaking this morning, the chancellor Jeremy Hunt said that it was “not a surprise” to see low economic growth “while interest rates are high”.
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He insisted that “there are signs the British economy is turning a corner”.
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.”
Labour responded by calling Hunt’s comments “insulting” and “out of touch”. A spokesperson for the Labour Party said: “Jeremy Hunt’s comments are as insulting as they are out of touch.
“The Conservatives’ failure to take any responsibility for Rishi’s recession show why we need an election.”
Shadow chancellor Rachel Reeves has said Rishi Sunak‘s promise to grow the economy is “now in tatters”.
“The prime minister can no longer credibly claim that his plan is working or that he has turned the corner on more than fourteen years of economic decline under the Conservatives that has left Britain worse off,” she said.
“This is Rishi Sunak’s recession and the news will be deeply worrying for families and business across Britain.”
Meanwhile, Liberal Democrat leader Sir Ed Davey said “Rishi’s recession has savaged the British economy” and “years of Conservative chaos” had “culminated in economic turmoil”.
“It’s hardworking Brits forced to pick up the tab for this mess, through high food prices, tax hikes and skyrocketing mortgage bills,” he said.
“This year the country will have the chance to kick out this incompetent and out of touch government once and for all.”
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