Rishi Sunak’s Recession Struggles: A Look at the British Economy’s Shallow Setbacks in 2023

The British economy is facing a challenge as it experienced a shallow recession last year, according to official figures released by the Office for National Statistics. Prime Minister Rishi Sunak must reassure voters of the safety and stability of the economy ahead of an expected election later in the year. Gross domestic product (GDP) contracted by 0.1% in the third quarter and 0.3% in the fourth quarter of last year.

Despite this setback, there are indications that the economy started 2024 on a stronger footing, with GDP growing by 0.2% in January and continued growth in February and March. However, Britain’s economy only grew by 0.1% in 2023, marking its weakest performance since 2009 during the global financial crisis, excluding the major setback in GDP caused by the pandemic in 2020.

The Bank of England has hinted at the possibility of cutting interest rates as inflation approaches a point that would allow for such a move. However, the economy is expected to grow by only 0.25% this year according to the Bank of England, while official budget forecasters anticipate a 0.8% expansion. Despite these challenges, there are some positive signs such as growth in households’ real disposable income and increased savings as the savings ratio rose slightly in the final quarter of last year.

Overall, while these figures may be disappointing for Sunak especially with opposition Labour Party criticizing him for overseeing what they call “Rishi’s recession”, he should take comfort from some positive signs such as growth in households’ real disposable income and increased savings which could help boost consumer confidence and spending going forward into an election year