Recent Data Shows That the UK Economy Finished 2023 in a Slowdown
The past couple of years have not been easy on the global economy, with analysts and economists expecting the current year to bring back a sense of balance to the environment. Recent figures coming from the UK have confirmed that the Q4 of 2023 ended in a recession, but since there are signs of recovery, most believe that 2024 might still live up to expectations and provide a more robust market going forward.
Confirmed Recession
On March 28th, revised GDP figures were officially released, confirming the findings of data made public earlier this year that showed the United Kingdom ended the previous year in a recession. However, the UK’s situation is not unique on the continent, as Germany and France have recorded no growth as well, according to Eurostat. In the last quarter of the previous year, GDP shrank by roughly 0.3%, numbers that were corroborated by the recent research.
During the previous three months, between June and August, there had been another drop to 0.1%. The Gross Domestic Product measures the whole scope of economic activity in a country, including that of individuals, corporations, businesses and the government.
It is the cornerstone of economic analysis, and when it grows, taxes become more elevated as well, while consumer spending increases and more jobs appear on the market. It’s not all doom and gloom, as the economy did climb by 0.1%, but since this growth was spread across the entire year, it didn’t register as well as the losses.
Recovery
So, what does the recession mean for members of the general public? While some prices might go down, others will become more elevated, with this being particularly the case for essentials. The higher prices can make it more difficult for people to live comfortably, so many turn to strict saving and budgeting or even take on an extra job to make ends meet.
Since businesses can go bankrupt, some people might struggle with reductions in work hours that result in less pay or even job loss. If you become injured or ill, the medical expenses can pile up and cause serious financial difficulties, especially if you require legal help as well. You can reach out to https://www.personalinjuryclaimsuk.org.uk/ in order to find a suitable solution.
Workers who have been laid off can have a hard time finding employment during a recession, as the competition for the remaining jobs becomes fierce and there are simply not enough positions to fulfil demands. The fact that it becomes difficult for people to afford even the necessities such as groceries and utilities naturally means that they won’t have disposable income left to spend on hobbies or passions such as travelling, which can decrease quality of life.
Luckily, there is a light at the end of the tunnel when it comes to recession. According to the latest data, there are indications that the UK has begun recovering as early as January. While it is a little too early to say, the current figures indicate that this trend may have continued throughout February and March. Other analysts believe that the economic problems run much deeper than that and that it is impossible to turn the corner on more than fourteen years of financial troubles.
Two Quarters
A recession is generally defined as two consecutive quarters of contraction. At the moment, the UK is doing slightly worse than that, having already surpassed that point during the third and fourth quarters of the previous year. At the moment, the majority of economists believe this is nothing more than a technical recession, as it remains relatively shallow. There’s also the possibility of a quick rebound later this year, so most are not concerned about long-term implications.
But when taking the population into account as well, the recession suddenly appears far more severe. GSP per capita fell by roughly 0.6% in the Q4. Moreover, it hasn’t grown since the first three months of 2022. Exporters have also had a difficult time in 2023, and when considering the whole year, the numbers have plummeted by 0.7%.
2008
Some economists believe that the current devaluation goes back as far as the 2008 recession, which occurred in the aftermath of a financial crash. Following Brexit in 2016, there has been a more considerable drop in private investments that only served to impact the market even further. Over the past three years, since 2021, the UK has also had to deal with trade restrictions. All of these conditions came together to downsize the economy and cause trouble overall.
Compared to their 2022 levels, goods exports were almost 5% lower in 2023, with the figures including both EU and non-EU marketplaces. This accounts for approximately £15.2bn, but when compared to the pre-pandemic levels, the situation is much more serious. At the time, the international trading environment was far more robust, and the figures show it as well. In 2023, exports were down well over 12% compared to pre-2020 levels, or £44.7bn.
One of the reasons why the market is seeing worse performance is because the price of energy and raw materials have also skyrocketed over the recent years as a result of geopolitical conflicts, disturbances in the supply chains and the effects of climate change. The higher population is also impacting the economy, with public spending rates going higher, something that can propel the GDP higher, but not in the absence of higher productivity rates.
The Overview
The current recession shows that global events have played a prominent role in destabilising economies and that it will take some time until things are back on track. The UK is no exception, and the downswing trend shows that it has become more vulnerable, particularly in the manufacturing sector. Luckily, becoming more resilient is achievable, but will take continuous effort and addressing complex issues including the threat of global warming and the decreasing living standards members of the general public have to deal with.
If these issues are solved, the lack of jobs could be resolved, and it would help kickstart the much-anticipated economic growth. Moreover, it would also help industries develop and grow through the means of innovation. Although there are some concerns regarding affordability, most economists consider inaction to be the bigger danger, so it’s clear that this problem won’t simply solve itself, but will require considerable attention.