London, Thanasis Gavos

The UK economy fell into recession in the final quarter of last year, according to the latest official figures.

According to the Office for National Statistics, the country’s GDP shrank by 0.3% in the October-December period, a bigger drop than economists had expected.

This performance follows the negative growth rate of -0.1% in the previous quarter. Two consecutive quarters of negative growth constitute a technical recession.

The negative development is attributed to the combination of high inflation and high interest rates, which hit consumer power, while all the main sectors of the economy, namely services, construction and manufacturing had a larger than expected drop in output in the last quarter of the year.

Economists estimate, however, that the recession will be short-lived, as inflation has subsided and wages are growing at a higher rate.

Reacting to the new data, Chancellor of the Exchequer Jeremy Hunt commented that “low growth is no surprise”, citing high inflation as the “biggest obstacle to growth”.

“But there are signs that the UK economy is turning the corner – analysts agree that growth will strengthen in the coming years, wages are rising faster than prices, mortgage rates have fallen and unemployment remains low. “While times are still tough for many families, we must stick to the plan, cutting taxes on labor and business to build a stronger economy,” Mr. Hunt added.

Labour’s shadow finance minister Rachel Reeves countered that Prime Minister Rishi Sunak “can no longer credibly claim his plan is working… this is Rishi Sunak’s recession”.