Last year’s recession was slightly weaker than first thought, revised data show

London

The recession the UK entered in the latter half of 2023 was slightly less severe than first thought, the Office for National Statistics revealed on Thursday as it released revised figures.

The economy still shrunk for two quarters in a row, the definition of a recession, but the total contraction over that six-month period dropped from 0.5% to 0.4%.

This is because of a small revision to the fourth quarter where the rate of contraction fell to 0.31% from 0.34%.

Combined with the third quarter, unrevised when measured to two decimal places, that left a slightly lower headline figure, the ONS said.

“Our updated set of GDP figures shows quarterly growth unrevised across 2023, with a little growth in the first quarter and small contractions in the latter half of the year,” said ONS director of economic statistics Liz McKeown.

“New figures on households show that savings remained high, with an increase in income in the last quarter of the year.”

Rob Wood, the chief UK economist at Pantheon Macroeconomics, said that while the new figures mean the UK was in a “technical recession”, it is still possible that later revisions to the numbers will undo this.

He added: “The recession was driven by consumers saving more in response to higher interest rates and fears about the impact on the economy.”

Across the whole of last year, GDP is thought to have risen 0.1%, the worst performance since the 2009 financial crisis if the pandemic year of 2020 is excluded.

When measuring real GDP per person, it is estimated to have fallen by 0.6% in the fourth quarter, and has not grown since the first three-month period of 2022.

That is because the population has grown faster than GDP. In 2023, GDP per person is estimated to have dropped 0.7%.

Liberal Democrat Treasury spokeswoman Sarah Olney said: “These damning figures confirm the damage done to the UK economy by Rishi’s recession.

“This Conservative government has no plan for growth or to help families paying the price for years of economic chaos through soaring mortgages and rents.”

Chancellor of the Exchequer Jeremy Hunt said: “Last year was tough as interest rates had to rise to bring down inflation, but we can see our plan is working.”

Labour shadow chancellor Rachel Reeves said: “Rishi Sunak has broken his promise to grow the economy and left Britain in recession with working people paying the price.

“The Conservatives cannot claim that their plan is working or that they have turned the corner on more than 14 years of economic failure.”

Register now for one of the Evening Standard’s newsletters. From a daily news briefing to Homes & Property insights, plus lifestyle, going out, offers and more. For the best stories in your inbox, click here.