Party defections, racism rows, worse NHS satisfaction levels on record, local election defeats and now… the economy is still shrinking.
Revised Official Figures Confirm Bad News
The corrected figures show that GDP (gross domestic product) shrank by 0.3% between October and December 2023.
Office of National Statistics Data Adheres to the Findings
Data from the Office for National Statistics showed that the economy contracted by 0.1% between July and September, confirming the official data from the government.
Government Pledge on Economy Not Being Achieved
One of the key pledges from Sunak was a promise to grow the economy. Across the entire year in 2023, the economy grew by 0.1%. As this data shows, this was all achieved in the first half of the year, because by the end of 2023 we were in recession.
Worst Economic Growth Since 2009
These figures show the country’s weakest economic growth since 2009, excluding during the COVID pandemic, when huge parts of the economy were forced to shut up shop.
2009 Was During the Credit Crunch
It’s worth pointing out that 2009 was when the global banking system was teetering on the edge, needing to be rescued by government bailouts.
General Sluggish Performance Across the Economy
The ONS have said that whilst economic performance across the board was poor, particularly slow sectors were construction and manufacturing. Production (manufacturing and production of various goods and services) was 1.1% smaller between October and November.
Chancellor Jeremy Hunt Trying to Paint a Bright Picture
The chancellor of the exchequer says…
“Inflation has fallen decisively from over 11% to 3.4%, the economy grew in January and real wages have increased for eight months in a row. Our cuts to National Insurance will boost growth by rewarding work and putting over £900 a year back into the average earner’s pocket.”
Experts Playing down Severity of Recession
Many economists are suggesting it’s a ‘mild’ recession, and the general feeling in the financial world is that it’s nothing major to worry about.
Ashley Webb, a UK economist said: “The UK’s mild technical recession at the end of last year was as mild as previously thought and the economic recovery is probably already under way.”
Calls for General Election Started
As expected, political rivals are calling for the general election to be announced sooner rather than later. The Lib Dem Treasury Spokesperson Sarah Olney said…
“This Conservative government has no plan for growth or to help families paying the price for years of economic chaos through soaring mortgages and rents”
Sunak Has Work to Do on Economy
Growth would be hard to achieve on the back of such high inflation and interest rates, but the government asks us to trust them. The public will be concerned at the headline data surrounding the economy.
Excuses to Fall of Deaf Ears
The cost of living has eroded the spending power of most Brits for a couple of years or more. This, coupled with zero growth in the economy will cause a lot of concern for British voters.
Potential Good News Lies Ahead
The headwinds the economy has faced seem to be dying down. Inflation appears to be falling, and the likelihood is we’ll see a reduction in interest rates this year.
Sunak and Hunt Desperate for Rate Cuts
Calls from the government for the Bank of England to cut interest rates will get louder and louder now. In the run up to an election, the government will be desperate for anything that will help boost voter confidence.
Reduction in Interest Rates Boosts Spending Power
When the Bank of England eventually reduces interest rates, borrowing costs will fall and more people will have more free cash to spend. That should see an uptick in economic growth.
Suggestions UK Has Exited Recession
It’s important to point out that economic data is always backwards-looking. It is reporting on economic activity in previous quarters. It’s not real-time data. There are suggestions the UK has already exited recession.
ONS Data Shows Economy Is Growing
The report from the Office of National Statistics release says that the UK’s GDP grew by 0.2% in January. Other economic activity surveys are showing that growth continued into February and March.
Feel Good Season Ahead
With the summer comes potential for further growth. Spring and summer see more domestic holiday activity. International sports tournaments see people head to pubs, boosting services sectors. Agricultural activity picks up.
Labour Party Ready to Pounce
Rachel Reeves, the shadow chancellor said Rishi Sunak has…
“…broken his promise to grow the economy and left Britain in recession with working people paying the price. The Conservatives cannot claim that their plan is working or that they have turned the corner on more than 14 years of economic failure.”
Brighter Days Ahead for Economy, but Not for Government
All indicators are reporting that the economy is set to grow, inflation is coming down and interest rates will be cut. The problem for the Tory party is that the damage to their reputation has already been done, and the general opinion is that it was government policy that damaged the economy.
Featured Image Credit: Shutterstock / Muhammad Aamir Sumsum.
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Featured Image Credit: Shutterstock / Sean Aidan .