Revised figures confirm UK ended 2023 in recession

Chancellor Jeremy Hunt has been speaking about the latest GDP figures.

He says: "These numbers confirm I think what we already knew, which is despite the Bank of England predicting the longest recession in 100 years, in fact GDP grew albeit marginally last year."

He then goes on to talk about childcare policies and says they are designed to get people back into work.

On the PM's pledges, he highlights the promise to halve inflation, saying that has been achieved. He then moves on to the promise of economic growth.

"I don't think any of us were expecting the economy to actually grow last year. The Bank of England wasn't, the Office for Budget Responsibility wasn't.

"In fact it did, albeit at a very slow rate. And that is a testament to the resilience of the economy but also the fact the government took some very difficult decisions early on to make sure we got the economy back on track."

The government and the Conservative Party will continue to argue that the economy is turning a corner – and turning a corner thanks to decisions they have made.

The Labour Party will continue to argue that the recession is the ultimate symbol of 14 years of Conservative failure.

These are the battle lines for the general election, whenever it comes.

There is not universal approval within both parties for how their senior teams are approaching the economy, though.

Within the Conservative Party, some MPs think that even if conditions improve this year they will not be rewarded electorally without more attention-grabbing retail policies – principally more tax cuts.

And within the Labour Party, some think it’s not enough to condemn the government’s stewardship of the economy, but that their leadership should do more to explain how they would govern differently.

While the news about last year's GDP figures has confirmed the economy shrank, the beginning of 2024 appears to be showing some more positive signs.

Today's ONS release shows the UK's GDP grew by 0.2% in January, with further unofficial surveys pointing to this small amount of growth continued into February and March.

Experts from the Capital Economics group say the early evidence indicates the UK "probably exited recession" between January and March.

Economist Ashley Webb from the think tank says today's data release "does not change much", noting it confirms:

Quote Message: The UK’s mild technical recession at the end of last year was as mild as previously thought and the economic recovery is probably already under way."

The UK’s mild technical recession at the end of last year was as mild as previously thought and the economic recovery is probably already under way."

There’s no change to the headline numbers from the end of last year, confirming that the UK was in a mild recession.

In fact, the economy is a tiny bit smaller than it was at the beginning of 2021.

While more timely data suggests that recession should already be over in the current quarter between January and March, the overall picture is of zero growth for a couple of years.

It is difficult to square this with Prime Minister Rishi Sunak's promise last year to “grow the economy”.

The chancellor pins the blame on rising interest rates, but the bulk of those increases had already occurred.

When the PM last week promised a “bounceback”, he was specifically talking about 2024. It is not evident in the 2023 numbers.

The prime minister and the chancellor will be dearly awaiting a series of rate cuts from the Bank of England which could, possibly, come as soon as May - though don't bet on that.

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Labour's shadow chancellor says the Office for National Statistics' confirmation that Britain has entered recession showed the Tories cannot claim their plan on the economy is working.

Rachel Reeves says: "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 fourteen years of economic failure."

Quote Message: It is time for a change. Rishi Sunak should name the date for the election and give the British people the chance to vote for a changed Labour Party that has a long-term plan to grow the economy." from Rachel Reeves Shadow Chancellor of the Exchequer

It is time for a change. Rishi Sunak should name the date for the election and give the British people the chance to vote for a changed Labour Party that has a long-term plan to grow the economy."

The confirmation the UK was in recession at the end of last year shows the government has "no plan for growth", the Liberal Democrats say.

The party's Treasury spokesperson Sarah Olney says today's figures "confirm the damage done to the UK economy".

"This Conservative government has no plan for growth or to help families paying the price for years of economic chaos through soaring mortgages and rents," she says.

Olney goes on to call for the government to hold a general election as being the "best thing for the economy".

We've just had some reaction from Chancellor Jeremy Hunt, who acknowledges "last year was tough" and says the government's "plan is working".

Reacting to the confirmation the UK was in a technical recession in the final two quarters of 2023, he says:

Quote Message: Inflation has fallen decisively from over 11% to 3.4%, the economy grew in January and real wages have increased for eight months in a row. Our cuts to National Insurance will boost growth by rewarding work and putting over £900 a year back into the average earner’s pocket." from Jeremy Hunt Chancellor of the Exchequer

Inflation has fallen decisively from over 11% to 3.4%, the economy grew in January and real wages have increased for eight months in a row. Our cuts to National Insurance will boost growth by rewarding work and putting over £900 a year back into the average earner’s pocket."

However, Hunt does not directly address the fact that the economy is in recession.

Yes, the economy expanded over the full year, by 0.1%, and in January it grew by 0.2% but those are pretty weak figures.

As for inflation, it is true that it has dropped sharply but that has more to do with actions taken by the Bank of England which lifted interest rates sharply to cool price rises.

The UK produces one of the quickest estimates of GDP of the major economies, about 40 days after the quarter in question.

At that stage, only about 60% of the data is available, so the figure is revised as more information comes in.

As we've been reporting, this time the additional data has not changed the initial assessment and UK economy remains in recession.

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According to the Office for National Statistics, economic performance has been poor across the board.

The worst is in what it calls "production" - which in layperson's terms means manufacturing as well as other areas such as energy and supply and waste management. It shrank by 1.1% between October and December.

Activity in the construction sector was also weak. The ONS said there was a drop in new work, in particular building new houses.

For the whole of 2023, the UK economy grew by just 0.1%.

Excluding the Covid pandemic, that is the country's weakest economic result since 2009.

That year saw the financial crisis when banks all but stopped lending, and some teetered on the brink of collapse.

We'll be getting the revised GDP figures from the Office for National Statistics (ONS) in a few minutes time at 07:00.

The most recent ONS release showed the UK economy had shrunk by 0.3% between September and December 2023 - which indicated the UK had entered a recession as it followed a 0.1% fall between July and September.

Stay with us as we bring you the latest.

When the economic figures are released the data they are based on continues to improve as more financial information is fed into the numbers.

This means that the big number can be revised up or down, a few months later. Normally this does not really change the bigger picture, and that is the case today.

The economy still will show flat stagnation, and near zero growth. But the official technical recession called last month on the basis of early figures could, in theory, be revised away.

The traditional definition of two consecutive quarters might no longer be met if, for example, the -0.1% registered between July and September last year is revised up to zero.

Does it make a difference? Not to our overall understanding of the state of the economy, but it could lift one political shadow over Downing Street.

The last revision of these GDP figures by the ONS revealed the UK economy had entered what is called a "technical recession" during the final three months of 2023.

A country is in recession if GDP falls for two successive three-month periods - known as quarters.

As the economy shrinks, there are several possible impacts - including a decline in the number of jobs hiring, people losing their work, businesses lowering their pay offers, or paying out less to shareholders.

Lower wages and profits also mean less tax money is generated for the government, which can mean cuts to things like benefits and public services - or higher tax rates.

The pain of a recession is typically not felt equally across society, and inequality can increase.

Benefit recipients and those on fixed incomes are particularly likely to struggle, especially if the government decides to spend less on public services.

• Read more about this here.

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Some critics argue GDP doesn't take into account whether the economic growth it measures is sustainable.

Just because GDP is increasing, it doesn't mean an individual person's standard of living is improving.

If a country's population increases, it pushes GDP up, because with more people, more money will be spent.

Unpaid work such as caring for children or elderly relatives isn't captured - neither is inequality.

GDP growth also doesn't show how income is split across a population - rising GDP could result from the richest getting richer, rather than everyone becoming better off.

Despite its limitations, GDP is still the most widely-used measure for most government decisions and international comparisons.

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On 4 January 2023, the prime minister set out his five priorities.

Recently we examined Rishi Sunak’s progress – in particular the one on “growing the economy".

The government has never publicly said what measure should be used to assess if it had met the prime minister's pledge to "grow the economy", despite repeated requests.

In some private briefings to journalists, sources said it would be if the economy was bigger in the three-month period of October to December 2023 than in the previous quarter (July-September).

That was not achieved in February as figures showed the economy shrank 0.3% in the last three months of 2023 - sending it into recession.

That pledge to grow the economy was made more difficult by the government's promise to halve inflation. The Bank of England put up interest rates 14 times to stop prices rising so quickly. However, this also reduced spending, and slowed economic growth.

• You can read more here about the progress Rishi Sunak has made on his five promises

How does GDP affect regular people? Well, the government can use growing GDP as evidence that it's doing a good job of managing the economy.

If GDP is going up steadily, people pay more in tax because they're earning and spending more. This means there's more money for the government that it can choose to spend on public services, such as schools, the police and hospitals.

Likewise, if GDP falls, opposition politicians tend to say the government's running it badly. GDP can be measured in three ways:

• Output: The total value of the goods and services produced by all sectors of the economy (agriculture, manufacturing, energy, etc)
• Expenditure: The value of goods and services bought by households and by government, investment in machinery and buildings - this also includes the value of exports, minus imports
• Income: The value of the income generated, mostly in terms of profits and wages

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Figures released in February by the Office for National Statistics (ONS) revealed the UK fell into a recession in the second half of 2023.

GDP fell by 0.3% in the last three months of 2023 - which was a sharper fall than economists were expecting.

This gave us two consecutive falls in GDP after a decrease of 0.1% in the three months before - between July and September 2023.

As a result the UK entered what is defined as “a technical recession”.

Industry group the Trades Union Congress (TUC) said February’s news suggested the UK was in “dire straits”, while the anti-poverty charity the Joseph Rowntree Foundation raised concerns for those already struggling with bills and food prices.

At the time, Chancellor Jeremy Hunt said: "The big picture is that, actually, since then the economy has been more resilient, unemployment has stayed low, real wages have been rising now for six months.

"And if we stick to our guns now, we can see light at the end of the tunnel."

• You can read more here about the UK economy falling into recession

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Good morning. The latest quarterly Gross Domestic Product (GDP) figures for the UK economy are due to be published at 07:00 GMT.

GDP, which broadly covers economic growth, measures the value of goods and services that the UK produces. It's measured by looking at output, expenditure and income.

When the number rises it means the economy is doing well - and when it falls it is doing badly.

GDP matters because it influences how businesses act, how the government chooses to set its tax and spending policies, and what the Bank of England does with interest rates.

All of these things have an impact on your pocket, which is why we're going to steer you through the Office for National Statistics (ONS) announcement.

We will bring you live updates and analysis from our team of journalists and correspondents.