Economists have said that to label the economic blip as a recession is “overly dramatic” as the fresh data only shows a “stagnation nation.”
Despite the doom and gloom announcement on Thursday morning experts are suggesting that the economy could be “slowly” starting “to brighten.”
Between October and December, the Office for National Statistics (ONS) estimated that GDP fell by 0.3%, two of more quarters in a row of falling GDP means the economy has entered into a recession.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said, “It’s overly dramatic to label the decline in economic activity in the second half of 2023 a recession, given that employment continued to rise, real wages rebounded and measures of business and consumer confidence returned to levels consistent with rising activity by the end of the year.”
Tombs added, “We expect quarter-on-quarter growth in gross domestic product to average 0.3% in 2024, driven by a pick-up in households’ real expenditure.
“The (Bank of England’s) Monetary Policy Committee, therefore, needn’t panic that the economy weakened at the end of last year and can proceed with its plans to cut Bank rate only gradually this year.”
Martin Beck, chief economic adviser to the EY Item Club said, “This year should see an improvement.
“Recent activity surveys signalled a recovery in momentum at the start of this year, and while industrial action in the health sector will hold back a revival in activity in first quarter, the ingredients are in place for a return to growth.”
James Smith, research director at the Resolution Foundation, said, “Britain has fallen into recession, and a far deeper living standards downturn. Even this weak data is flattered by a rising population.
“After accounting for population growth, the UK economy hasn’t grown since early 2022, and fallen far behind its pre-cost-of-living crisis path, with an equivalent loss of around £1,500 per person.
“The big picture is that Britain remains a stagnation nation, and that there are precious few signs of a recovery that will get the economy out of it.”
Anna Leach, deputy chief economist at the Confederation of British Industry (CBI), added, “This brings to a close a pretty stagnant year for UK economic growth.
“Better-than-expected real earnings growth will support consumers against the headwind of higher interest rates.
“But firms remain under pressure from higher borrowing costs, higher prices, weak demand and ongoing challenges recruiting the workers they need to grow and invest.”
