UK recession last year was slightly less severe than first thought, new data

28 March 2024 , 08:21

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Sarah Olney from the Liberal Democrats said: "These damning figures confirm the damage done to the UK economy by Rishi's recession" (Image: PA Wire/PA Images)

The recession the UK entered in the latter half of 2023 was slightly less severe than first thought, the Office for National Statistics revealed on Thursday as it released revised figures.

The economy still shrunk for two quarters in a row, the definition of a recession, but the total contraction over that six-month period dropped from 0.5% to 0.4%. This is because of a small revision to the fourth quarter where the rate of contraction fell from 0.31% to 0.34%.

Combined with the third quarter, unrevised when measured to two decimal places, that left a slightly lower headline figure, the ONS said. "Our updated set of GDP figures shows quarterly growth unrevised across 2023, with a little growth in the first quarter and small contractions in the latter half of the year," said ONS director of economic statistics Liz McKeown. "New figures on households show that savings remained high, with an increase in income in the last quarter of the year."

Rob Wood, the chief UK economist at Pantheon Macroeconomics, said that while the new figures mean the UK was in a "technical recession", it is still possible that later revisions to the numbers will undo this. The recession was driven by consumers saving more in response to higher interest rates and fears about the impact on the economy."

Last year, the UK's economy barely grew at all, with a tiny 0.1% increase in GDP, which is the worst it's been since the financial troubles of 2009 if we don't count the pandemic year of 2020. When measuring real GDP per person, it is estimated to have fallen by 0.6% in the fourth quarter, and has not grown since the first three-month period of 2022.

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This is happening because there are more people than the amount of money the country is making. In 2023, the money made per person has fallen by 0.7%. Sarah Olney from the Liberal Democrats said: "These damning figures confirm the damage done to the UK economy by Rishi's recession."

She also said that the government doesn't have a good plan to make things better or to help families who are struggling with very high house costs. Jeremy Hunt, who looks after the UK's money, said: "Last year was tough as interest rates had to rise to bring down inflation, but we can see our plan is working."

Rachel Reeves from the Labour Party 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.”

Lawrence Matheson