UK Falls into Recession in Second Half of 2023, Economy Still Struggles to Recover

According to official data released on Thursday, the British economy fell into recession in the second half of 2023. The gross domestic product decreased by 0.1% in the third quarter and by 0.3% in the fourth, matching preliminary estimates previously published. Despite some progress in early 2024, with GDP growing by 0.2% in January and continued growth recorded in February and March according to unofficial surveys, recovery from the impact of the COVID-19 pandemic has been slow. Currently, the UK economy is just 1% bigger than it was at the end of 2019, with Germany the only underperforming G7 country.

The Bank of England has indicated that British inflation is approaching a level where they can start cutting interest rates. The bank expects economic growth of only 0.25% this year, while official budget forecasters are more optimistic, expecting economic growth of 0.8%. Following the release of this data, the value of sterling against the US dollar and the euro remained relatively stable.