Britain’s economy slipped into a recession at the end of 2023 after output contracted by more than expected in the final three months, according to official figures.
The Office for National Statistics (ONS) estimated that gross domestic product (GDP) fell by 0.3% in the fourth quarter, following a decline of 0.1% in the previous three months.
It means that the economy entered a technical recession, as defined by two or more quarters in a row of falling GDP.
It marks the first time the UK has entered recession since the first half of 2020, when the initial Covid-19 lockdown sent the economy plunging into reverse.
@uktoday_ Here’s the UK Recession explained #ukrecession #recession2024 #gdp #uknews #uknewsheadlines ♬ original sound - UKToday 🇬🇧 Newsquest
Chancellor of the Exchequer Jeremy Hunt said: “High inflation is the single biggest barrier to growth which is why halving it has been our top priority. While interest rates are high - so the Bank of England can bring inflation down - low growth is not a surprise.
"But there are signs the British economy is turning a corner; forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low. Although times are still tough for many families, we must stick to the plan – cutting taxes on work and business to build a stronger economy.”
So what is a recession and what effect could it have on the UK public?
What is a recession?
According to business magazine Forbes, a recession is "a significant decline in economic activity that lasts for months or even years.
Forbes added: "Experts declare a recession when a nation’s economy experiences negative gross domestic product (GDP), rising levels of unemployment, falling retail sales, and contracting measures of income and manufacturing for an extended period of time."
What causes a recession?
There are, according to Forbes, six main causes of a recession:
- A sudden economic shock
- Excessive debt
- Asset bubbles
- Too much inflation
- Too much deflation
- Technological change
How does a recession affect me?
During a recession, you could lose your job, as unemployment levels rise and it becomes harder to find a new one since more people are out of work and people who keep their jobs may see cuts to pay and benefits.
Investments - in things like stocks, bonds and property - can lose money.
Businesses are also affected, usually recording fewer sales during a recession which increases the risk of bankruptcy.
Lenders tend to tighten standards for mortgages, car loans and other types of financing.
Forbes added: "Even if you plan ahead to prepare for a recession, it can be a frightening experience."
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereLast Updated:
Report this comment Cancel