The United Kingdom’s economic system is currently on a path that could end in recession.
Revised data for the third quarter of 2023 showed that the economy of the mentioned country has shrunk. In the period from July to September of this year, the gross domestic product of the United Kingdom showed a negative dynamic. This indicator decreased by 0.1% compared to the result for the second quarter of 2023. The relevant data were published by the Office for National Statistics on Friday, December 22.
The initial expert assessment of the GDP of the United Kingdom was positive and assumed steady growth, but the real indicator destroyed this somewhat idealized vision of the situation in the British economy.
Also, the revised data indicate that there was zero growth in the UK economic system in the prior three months until November. At the same time, experts, including from official government agencies, expected a positive dynamic. They predicted the growth of the British economy at 0.2% in the third quarter of 2023.
The data, which will be released in February, will show whether the British economy is in a state of technical recession. In this case, a slowdown is meant, which is fixed for two consecutive quarters.
Chancellor of the Exchequer Jeremy Hunt said that the medium-term economic outlook for the United Kingdom is more optimistic than the revised data for the last quarter.
Richard Carter, head of fixed interest rate research at Quilter Cheviot, says that UK economic growth is weakening. The expert noted that the impact of high-interest rates is becoming more painful. Richard Carter said that as of today, the United Kingdom has been able to avoid a recession, but there is no guarantee that a negative scenario will not be realized next year.
The expert also noted that the decline in inflation in the UK exceeded expectations in a positive sense, forecasts for the dynamic of interest rates have improved, but there is a possibility that the damage to the economic system has already been done. If Richard Carter’s assumption is correct, it means that the British economy is in the zone of negative realities, the impact of which will not be able to be fully offset.
Ashley Webb, a British economist at Capital Economics, says that the mildest of the recessions may have started in the United Kingdom in the third quarter. According to the expert, rapid GDP growth should not be expected in the current quarter.
Niraj Shah of Bloomberg Economics says that the current British reality is that consumer spending is under pressure as high interest rates consume household budgets, despite wage growth exceeding the temps of inflation.
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