The data shows GDP fell by 0.3% Q4 2023

UK economy falls into recession in Q4 2023 but there are 'still positives for mortgage rates' say industry professionals

The UK fell into recession in the last quarter of 2023, according to the latest data from the ONS.

GDP is estimated to have fallen by 0.3% from October to December of 2023, meaning the economy shrunk over two consecutive quarters last year, despite the economy growing by 0.1% across 2023 compared with the previous year.

Construction declined by 1.3%, while production dropped by 1.0% and services fell 0.2% in Q4.

The news comes in conjunction with a fall in construction output in Q4 2023, as well as a flatlined inflation rate for the year leading up to January 2024.
Industry experts have reacted to the latest UK economic news.

Industry professionals commented on GDP data from the ONS.

Paresh Raja, CEO at MFS, commented: “The UK economy has been teetering on the edge for the past 12 months, so confirmation that it has entered a recession will not come as a major shock.

“But it’s a blow all the same, not least to Rishi Sunak – while GDP rose by 0.1% in 2023, meaning the PM technically delivered on one of his key promises to grow the economy, today’s news will damage confidence in the government.

“Given we learned yesterday that inflation is refusing to fall, Jeremy Hunt also faces some stern challenges — the chancellor is delivering his spring budget in three weeks’ time, and the ongoing battle between high inflation and elevated interest rates must be high on his agenda, as will pulling the economy out of this recession.

“In the meantime, lenders need to be proactive to ensure the property market remains active despite these lingering economic challenges.”

James Bloom, director at Alternative Bridging added: “This is a technical recession and we had already had a period of zero growth so these figures are unsurprising.

“The priority has been to get inflation down to the BoE 2% target and 14 base rate rises is bound to lead to issues in the economy despite the fact that the higher inflation was not consumer led.

“We are seeing some signs of a pick up in the economy and inflation does appear to be slowing and heading someway towards target, we may well start to see base rate start to slowly reduce later this year which will help the property market.

“I don’t feel today’s figures really change anything, there are some obvious grey clouds on the horizon which might lead to further upward pressure on inflation but I see some reasons for cautious optimism.”

Jonathan Samuels, CEO at Octane Capital said: “Clearly falling into technical recession is negative for the country as a whole, and Rishi Sunak in particular, but there are positives for mortgage rates.

“The BoE will be far more inclined, and under far more political pressure, to lower interest rates so as to stimulate the economy.

“Economic growth is a key test that Sunak has set himself so expect political pressure to build towards the next rate decision.

“Even before then, markets will expect rates to move down so swap rates will likely begin to fall, allowing mortgage rates to lower even before the next MPC meeting.”


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