Britain’s gross domestic product (GDP) fell by 0.3 per cent in the fourth quarter, following a 0.1 per cent decline in the previous three months. The UK Statistics Authority said in a preliminary report today. The British economy is thus in recession, which is usually defined as two consecutive quarters of economic contraction.
British economy faces challenges amid predicted GDP decline
Economists in a Reuters poll on average estimated that GDP would fall by 0.1 percent. The manufacturing, construction and wholesale trade sectors were the biggest contributors to the decline in GDP in the final three months of last year. It is the deepest decline since the first three months of 2021, when Britain introduced anti-pandemic measures. The Bank of England expects the economy to recover this year.
“There are signs that the British economy is turning for the better. Forecasters agree that growth will pick up over the next few years, wages are rising faster than prices, mortgage rates are falling and unemployment remains low,” said British Chancellor of the Exchequer Jeremy Hunt. “Although this is still a difficult time for many families, we need to stick to the plan – cutting taxes on work and business – to build a stronger economy,” he added.
Businesses urge government action amid economic slowdown
“Businesses are no longer under any illusions about the difficulties they face and this news will no doubt send a warning signal to the government,” said Alex Veitch of the British Chambers of Commerce. “The Chancellor must use the Budget, which is less than three weeks away, to set out a clear path to growth for businesses and the economy,” he added.
Slow economic growth this year could make it difficult for Prime Minister Rishi Sunak to win voters ahead of this year’s elections. The media has reported that Chancellor Hunt is trying to slash billions of pounds from public spending plans to fund pre-election tax cuts.
The British pound weakened slightly against the dollar and the euro after the statistics were published. Investors are now more inclined to believe that the Bank of England will cut interest rates this year.
Source: Czech Press Office
