The UK recession in the latter half of 2023 was slightly less severe than initially estimated, according to revised figures released by the Office for National Statistics. The economy contracted by 0.4% over a six-month period, down from the previous estimate of 0.5%. The revision is due to a small decrease in the rate of contraction in the fourth quarter [6bfee7d0].
The recession was driven by increased consumer savings in response to higher interest rates and economic concerns. The UK's GDP barely grew in 2023, with a 0.1% increase, and real GDP per person fell by 0.6% in the fourth quarter [6bfee7d0].
Despite the revised figures, the UK economy still faces challenges. GDP has not grown since 2022, with a contraction of 0.3% in Q4 2023. GDP per head remains lower than before Covid-19. However, GDP is projected to grow by 0.9% in 2024 [1aec5b70].
In addition to the recession, the UK economy is grappling with high inflation. UK CPI inflation was 4% in January 2024, unchanged from December 2023. Energy price increases contributed significantly to rising CPI inflation, but these increases have been dropping out of the CPI basket, contributing to driving down inflation. Services inflation has averaged around 6-7% since H2 2022, indicating underlying domestic inflationary pressures [1aec5b70].
The revised data has prompted criticism from the Liberal Democrats, who have called for a better plan to support struggling families. They have criticized the government's handling of the recession and its impact on the economy [6bfee7d0].
All major sectors of the UK economy were in contraction at the end of 2023, with output falling by 0.9% in construction, 1.1% in production, and 0.1% in services [f1999cad].
The article 'How to invest during a 'rolling recession'' provides insights on investing during a recession and discusses the impact of the recession on different sectors. It highlights that while all sectors of the UK economy were in contraction, some sectors are poised for a turnaround. The article offers guidance on which sectors investors should consider for potential growth [f1999cad].
Overall, while the revised figures show a slightly less severe recession in 2023, the UK economy still faces challenges in terms of economic growth, inflation, and support for struggling families [6bfee7d0] [1aec5b70] [f1999cad].