Barely 24 hours into the news of Japan's economy sliding into technical recession, reports suggest that the United Kingdom slipped into a recession in the second half of 2023, thanks to slowing down of economic activities. This i seen as a huge blow to the embattled UK Prime Minister Rishi Sunak’s. These reports fly in the face of the Conservative party leader's claim, that the economy is growing. The timing of this news is not good for the country and its incumbent government either, as it stares down an election, that is round the corner.
Global woes: UK gets bad news after Japan
The Gross domestic product (GDP) which is a marker for the economy fell 0.3 per cent in the fourth quarter. This more than the 0.1 per cent drop estimated by economists. This is deemed by many as a result of economic stagnation, that has resulted in development of 'technical recession'. A technical recession is when the economy or in this case, specifically, the GDP shrinks or contracts over two consecutive quarters.
As a ripple effect of this development, the UK currency, the pound slipped against the dollar after the release. It traded as much as 0.1 per cent weaker at USD 1.2548.
Slump during an election year
This may also pressurize the Bank of England to make some crucial decisions, including, even cutting the interest rate. Previously, the US also reported relative rise in inflation rate, as the CPI for January was pegged at 3.1 per cent, above estimation of 2.9 per cent. Japan's fortunes, on account slugging consumption also took a hit, as it entered recession, losing its position of the third largest economy.
As far as the UK is concerned, this news is expected to be used by the opposition Labour party (led by Sir Keir Starmer) of the UK, to further sharpen its poignant attack on the Conservative government under PM Sunak.
