IoD: Technical recession is a blow for business!

Commenting on the release of December’s monthly GDP data, which showed that GDP declined by 0.1%, Dr. Roger Barker, Director of Policy at the Institute of Directors, said:

“Confirmation that the UK economy failed to avoid a technical recession in the second half of last year is a psychological blow for business.

“A decline of 0.1% in December translated into negative growth of 0.3% across the quarter as whole. As this was the second consecutive quarter of negative growth, the criterion for a technical recession was met.

“In December, the output figures were dragged down by a 0.1% decline in the services sector and a 0.5% contraction in construction. However, the production sector actually grew by 0.6%.

“Looking at 2023 as a whole, the economy grew by 0.4%. December’s figures do not make a significant difference to the big picture: that the economy largely moved sideways last year. Furthermore, the current technical recession cannot be compared to the last recession in the first half of 2020, when GDP fell more than 20% in a single quarter due to the onset of the Covid pandemic.

“Business leaders will now be shifting their attention to the future. Recent data from our members suggests that business confidence has been slightly improving in recent weeks. It is important that this progress is sustained by the policy decisions of the Chancellor and the Bank of England.”