Britons are being warned that the UK “economy is back in recession” despite the latest gross domestic product (GDP) figures showing a slight uptake growth in the latest quarter.
Earlier this morning, data published by the Office for National Statistics (ONS) revealed that the country’s GDP rate jumped by 0.1 per cent between October and December 2024.
This comes after Britain posted no growth in the third quarter of 2024, meaning the nation did not fall into a technical recession towards the end of the year and going into 2025.
A recession is defined as happening when a country experiences two consecutive quarters of negative growth, with the UK last being in this position during the second half of 2024.
However, independent economist Julian Jessop is sounding the alarm that everyday Britons are likely to feel as if they are living through an economic downturn due to statistics buried in the ONS figures.
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Economists are claiming Britain’s “economy is back in recession”
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He explained: “The UK economy actually grew by 0.1 per cent in Q4 2024, helped by a 0.4 per cent monthly jump in December. But it still says a lot that growth of just 0.1 per cent is seen as ‘good news’ – and the economy is back in recession in terms of output per head.”
While real GDP figures reflect the overall economic output and growth of the UK, real GDP per head mirrors the average economic output per person, which helps contrast living standards across different nations or time periods.
To calculate the growth rate per head, the ONS takes the real ONS figures and divides it by Britain’s population, with the UK seeing GDP slip in both the third and fourth quarters of 2024.
Real GDP per head is estimated to have dropped by 0.1 per cent during October to December, after slipping 0.3 per cent the quarter, meaning it was down 0.1 per cent for the year.
Chancellor Rachel Reeves announced the Budget in the House of Commons last October
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Reacting to today’s ONS figures, a senior Labour minister told BBC Breakfast he would not “pick an arbitrary date” for when Britons will start to feel better-off financially.
Housing Minister Matthew Pennycook said: “I’m not going to pick an arbitrary date, but we’re absolutely focused on boosting living standards. That’s at the heart of our plan for change. Wages have increased. People can expect and look forward to that rise in the minimum wage that comes into effect in April.”
Chancellor Rachel Reeves also cautioned the public that it “not possible to turn around more than a decade of poor economic performance in just a few months” when challenged over her plan for economic growth.
She explained: “We are doing what is necessary to bring stability back to the economy, the planning system, regulation and pensions to encourage investment in our economy.
“We need to go further and faster in doing that, to turn around our poor growth performance and to make working people better off.”
Analysts have questioned whether the Chancellor’s tax raid on businesses, with the changes to National Insurance, and the hike to the rate paid from the National Living Wage, is harming growth.
Despite recession concerns, Scottish Friendly’s savings specialist Kevin Brown believes the latest GDP figures from the ONS suggest the economy is doing “better-than-expected”.
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He shared: “There has been plenty of doom and gloom about the prospects for the UK economy. This GDP data gives a glimmer of hope that a revival is possible. Economists had widely been expecting a fall, but thankfully the UK economy didn’t get the memo.
“This is a very small break from the pervasive pessimism about the UK, and it’s still a tough hand for Chancellor Rachel Reeves, particularly if it makes the Monetary Policy Committee more hawkish on future rate cuts. Inflationary pressures remain and her headroom still looks vanishingly small.
“The Government’s ‘Plan for Change’ could further move the growth dial, but sadly not in the short-term. For that, consumers need to get back in the shops and businesses need to start investing again.
“That takes confidence and, despite the better-than-expected GDP figures today, confidence is still very much in short supply.”
Chancellor Rachel Reeves will outline the Labour Government’s updated fiscal agenda on March 26.
