Economic Woes Continue to Plague Britain as Recession Confirmed

On Thursday, official figures were released confirming that Britain’s economy had fallen into a recession in the latter half of 2023. According to the Office for National Statistics, gross domestic product (GDP) decreased by 0.1% in the third quarter and by 0.3% in the fourth quarter, matching preliminary estimates reported earlier. Despite some improvement at the beginning of 2024, with GDP growing by 0.2% in January and continued growth reported in February and March according to unofficial surveys, Britain’s economy has been slow to recover from the impact of the COVID-19 pandemic. Currently, its GDP is only 1% larger than it was in late 2019, making it one of the worst performers among G7 nations.

The Bank of England has indicated that British inflation is nearing a level where they can begin reducing interest rates. The Bank expects the economy to grow by just 0.25% this year, while official budget forecasters are more optimistic, expecting a 0.8% expansion in the economy. Following the release of this data, the value of sterling against both the U.S. dollar and euro remained relatively stable.