UK economy contracts 0.3% in fourth quarter

UK’s economy has entered a technical recession in the fourth quarter of 2023 for the first time since the aftermath of the coronavirus outbreak in the first half of 2020, with elevated inflation, multi-year high interest rates and weak external demand pressuring overall activity.

The nation’s Gross Domestic Product decreased 0.3% quarter-on-quarter in Q4, a final estimate showed, after another 0.1% contraction in Q3.

Household consumption shrank 0.1% in Q4 as a result of lower spending on recreation and culture, household goods and services, transport as well as clothing and footwear.

Another negative contribution to the GDP came from net trade, with exports shrinking faster than imports.

On the other hand, government consumption rose 0.1% in Q4, which marked a third straight period of increase, due to higher spending on public administration and defense.

In annual terms, the nation’s economy shrank 0.2% in the fourth quarter of 2023, which has been the first period of contraction since the 2020-2021 recession.

The Sterling was last edging down 0.29% on the day against the US Dollar, with the GBP/USD currency pair trading at 1.2603.