Nigerians, others worry as UK economy falls into recession

Nigerians, others worry as UK economy falls into recession

 

There is palpable fear among Nigerians heading for London among other people as the United Kingdom’s economy has fallen into recession.

The was reported as the Gross domestic product (GDP) – a key measure of economic activity – dropped by 0.3 per cent between October and December 2023.

According to the UK’s Office for National Statistics (ONS), the fall in the GDP was due to a decline in all main sectors of the economy.

This is considered the “mildest recession” witnessed in 50 years — unlike the huge drop of over one per cent sometimes seen, according to the BBC.

The ONS confirmed the real GDP fell 0.3 per cent in the fourth quarter (Q4) of 2023.

The UK is considered to be in recession if the GDP falls for two successive three-month periods.

The figure will be a blow to Prime Minister Rishi Sunak, according to economic analysts.

Growing the economy was one of five pledges Sunak made in January 2023.

Chancellor Jeremy Hunt is less than three weeks away from unveiling his latest budget.

Shadow chancellor Rachel Reeves said the data showed that Mr Sunak’s pledge to grow the economy was “in tatters”.

Treasury sources confirmed to the BBC News that the chancellor was looking at a larger pencilled-in squeeze on public spending as a way to deliver tax cuts in the budget on 6 March.

Forecasts for the public finances have materially deteriorated in recent weeks as interest costs on UK government borrowing has increased. Final decisions have not been made.

Commenting on the GDP, Hunt said, “While interest rates are high – so the Bank of England can bring inflation down – low growth is not a surprise.”

He added that there were “signs the British economy is turning a corner”.

But Mr Reeves said: “This is Rishi Sunak’s recession and the news will be deeply worrying for families and business across Britain.”

Figures from the Office for National Statistics showed that during the final three months of last year, there was a slowdown in all the main sectors it measures to determine the health of the economy, including construction and manufacturing.

The figure for the final three months of last year was worse than a 0.1% fall widely forecast by financial markets and economists.

The GDP for the third quarter, between July and September fell by 0.1%.

Ruth Gregory, deputy chief UK economist at Capital Economics, said the latest economic figures “might nudge the Bank of England a little closer to cutting interest rates”.

“But we doubt the Bank will be too worried about what is likely to be a mild and short recession,” she added.

Recent figures showed that inflation – which measures the pace of price rises – remained at 4% in January.

The Bank of England had been lifting interest rates to put the brakes on inflation but has kept them at 5.25% since August last year.

For the year as a whole, the economy grew by 0.1%.

“While it has now shrunk for two consecutive quarters, across 2023 as a whole the economy has been broadly flat,” said Liz McKeown, director of economic statistics at the ONS.