The recession would be confirmed and inflation would also be a double blow to the economy
- Figures show that inflation rose to 4.2% in January, compared to 4% in December
- GDP appears to have contracted 0.1% in the fourth quarter, following a 0.1% contraction in the third quarter
- Hopes for a revival of growth and an end to cost-of-living pressures are being dashed
It appears the UK economy is in for a double blow this week – with figures expected to confirm a recession late last year and a rise in inflation in early 2024.
That would be a blow to ministers’ hopes to revive growth and end cost-of-living pressures as the election approaches.
However, experts believe the setbacks will be temporary. And a business survey by accounting firm BDO shows that production returned to the strongest level in eighteen months at the beginning of this year.
Office for National Statistics figures, due to be published on Wednesday, are expected to show inflation rose to 4.2 per cent in January, while energy bills rose, up from 4 per cent in December.
Separate ONS data on Thursday forecast GDP contracted 0.1 percent in the fourth quarter of last year, after a difficult December with poor retail sales, public sector strikes and miserable weather.
The flag is flying: the UK economy looks set for a double whammy – with figures expected to confirm a recession late last year and a rise in inflation in early 2024
This comes after a 0.1 percent contraction in GDP in the third quarter.
Two straight quarters of negative growth are defined as a recession and this would be the first since the pandemic hit in 2020.
Prime Minister Rishi Sunak acknowledged in a newspaper interview this weekend that “we want growth to be higher,” but pointed out that the long and deep recession he feared when he came to power had not materialized.
Instead, Britain’s performance – while sluggish – has so far steered clear of a decline and has surpassed that of struggling Germany.
Paul Dales of Capital Economics said Britain is on the verge of a so-called ‘soft landing’, meaning inflation falls without the economy collapsing.
“The good news is that any recession will be small and may already be coming to an end,” he added.
“We think the economy will recover in the coming quarters.”