UK enters technical recession as GDP contracts 0.3% in Q4

The UK fell into a technical recession after gross domestic product (GDP) shrank by 0.3% in the final three months of 2023, according to the ONS latest report. 

The news marks the first time the UK has entered a recession since the first half of 2020, when the initial Covid-19 lockdown stalled the economy. 

While most economists were forecasting a 0.1% decline in GDP between October and December, the Golden Quarter contraction was the biggest since the first three months of 2021 at the height of the pandemic.

According to the ONS’s data, output fell 0.1% in December after downwardly-revised growth of 0.2% in November 2023, while the contraction in October was also worse than expected at 0.5% against the initially estimated fall of 0.3%. 

Across the whole year, data showed that the economy grew by 0.1%, down from 4.6% in 2022, which is thought to be the weakest growth since the aftermath of the financial crisis in 2009.

Liz McKeown, director of economic statistics at ONS, said: “All the main sectors fell on the quarter, with manufacturing, construction and wholesale being the biggest drags on growth, partially offset by increases in hotels and rentals of vehicles and machinery.

“The latest data showed that health and education performed less well than initially estimated in both October and November. Early indications suggest they both contracted in December.”

She added: “Retail and wholesale were the biggest overall downwards pulls on the economy in December, partially offset by growth in computer programming and manufacturing.”