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UK Enters Recession as Spending Declines: Official figures reveal that a decline in spending, doctors’ strikes, and reduced school attendance led the UK into a recession at the end of the last year.
Between October and December, the economy contracted by 0.3%, a larger decline than anticipated, following a previous contraction from July to September. A recession occurs when the economy doesn’t grow for two consecutive quarters. The UK Enters Recession as Spending Declines in details below.
UK Enters Recession as Spending Declines: United Kingdom
Questions arise regarding Rishi Sunak’s commitment made in January to boost the economy. The government has not specified the measure to assess meeting the Prime Minister’s pledge publicly.
Despite private briefings suggesting growth between October and December compared to the previous three months, Mr. Sunak’s promise remains unfulfilled due to a 0.1% shrinkage in July to September.
As per UK Enters Recession as Spending Declines, In 2023, the UK economy grew by 0.1%, the weakest annual growth figure since 2009, excluding the Covid years.
Shadow chancellor Rachel Reeves criticized the latest figures, stating that Mr. Sunak’s economic growth pledge is “in tatters.”
The UK’s economic challenges are not unique, with the European Union narrowly avoiding recession in the second half of 2023, and Japan confirming its second consecutive quarter of economic contraction.
The Office for National Statistics (ONS) identified several areas where the economy struggled. December saw reduced spending after Black Friday sales in November, while the health sector was impacted by junior doctors’ strikes, and school attendance dropped by 1%.
Gross domestic product (GDP), a key measure of economic activity, influences government decisions on public services funding. Growing GDP signals effective economic management, while a decline can lead to criticism of government policies.
As per the UK Enters Recession as Spending Declines, In response to deteriorating public finances, Chancellor Jeremy Hunt is reportedly considering a larger squeeze on public spending for potential tax cuts in the upcoming Budget on 6 March.
While commenting on Mr. Sunak’s economic growth pledge, Mr. Hunt emphasized the priority of tackling inflation, noting the economy’s resilience and positive indicators such as low unemployment and rising real wages.
Recent figures show a slowdown in wage growth but outpacing price rises, and inflation, though lower than expected in January, remains double the Bank of England’s 2% target.
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