The GDP of the United Kingdom decreased by 0.3 percent in December 2023, signaling the start of a recession.
The UK’s Office for National Statistics (ONS) reports that a downturn in each of the major economic sectors was the cause of the GDP reduction.
According to the BBC, this recession is the “mildest” to be observed in 50 years, as opposed to the occasional sharp decline of more than 1%.
According to the ONS, the real GDP decreased by 0.3 percent in 2023’s fourth quarter (Q4).
According to the agency, in response to skyrocketing borrowing rates and growing living expenses, financially strapped households reduced their expenditures.
After growing by 4.3 percent in 2022, the UK GDP was predicted to have climbed by 0.1 percent for the entire year in 2023.
With the exception of 2020, when the coronavirus (COVID-19) pandemic ravaged the country, the ONS reports that this is the lowest year change in real GDP since the financial crisis in 2009.
According to the UK statistics office, “the gross domestic product (GDP) is estimated to have fallen by 0.3% in Quarter 4 (Oct to Dec) 2023, following an unrevised fall of 0.1% in the previous quarter.”
“Even though the economy has now shrunk for two quarters running, GDP is predicted to have grown by 0.1% in 2023 compared to 2022.
“In terms of output, the most recent quarter of 2023 saw decreases in all three major sectors: services had a 0.2% reduction, production saw a 1.0% decline, and construction saw a 1.3% decline.
“In terms of spending, there was a decrease in net trade volume, household spending, and government consumption in Q4 2023, which was somewhat offset by a rise in gross capital formation.”
In the meantime, the ONS reported that the nation’s inflation rate in January 2024 was 4.2%, which was the same as it was in December 2023.
The decline in food prices, which dropped from 5.2 percent in December 2023 to 5.1 percent in the year ending January 2024, was cited as the cause of the rate.
Additionally, the annual rate of prices for commodities decreased from 1.9 to 1.8 percent, while the annual rate of prices for services increased from 6.0 to 6.1 percent.
In response to the study, Jeremy Hunt stated that lowering inflation has been our top focus as it is the single largest obstacle to growth.
“Low growth is not surprising, even though interest rates are high, allowing the Bank of England to control inflation,” stated Hunt.
However, there are indications that the British economy is turning the corner: analysts concur that growth will pick up steam in the next years, incomes are increasing more quickly than prices, mortgage rates are declining, and unemployment is still low.
“We must stick to the plan—cutting taxes on work and business to build a stronger economy—even though times are still hard for many families.”
JAPAN’S GDP SLIPS INTO RECESSION, LIKE THE UK’S
Similarly, the third-biggest economy, Japan, abruptly entered a recession.
According to a report released by the cabinet office on Thursday, the GDP of the nation shrank in the fourth quarter of 2023 at an annual rate of 0.4 percent.
According to the data, spending was reduced for a third consecutive quarter by both enterprises and families.
External demand, which is represented by exports of goods and services, contributed positively, while all domestic demand was extremely weak.
Additionally, for the first time in more than 33 years, the value of the Japanese yen relative to the US dollar fell to its lowest point.
Since the beginning of 2024, the Yen has lost 6.6% of its value relative to the US dollar.
According to the data, Germany currently has the third-biggest economy in the world, while Japan’s economy was the fourth largest in the world last year in terms of dollars.
