On Thursday, official figures were released confirming that Britain’s economy fell into a recession in the latter half of 2023. According to the Office for National Statistics, gross domestic product (GDP) declined by 0.1% in the third quarter and by 0.3% in the fourth quarter. These figures matched the preliminary estimates that were previously reported.
Despite some improvement at the beginning of 2024, with GDP growing by 0.2% in January and continued growth reported in February and March according to unofficial surveys, the recovery from the impact of the COVID-19 pandemic has been slow. Currently, Britain’s economy is only 1% larger than it was in late 2019, with Germany being the only G7 nation with a worse performance.
The Bank of England has indicated that British inflation is nearing a level where they can begin reducing interest rates. The Bank expects the economy to grow by just 0.25% this year, while official budget forecasters are more optimistic, expecting a 0.8% expansion in the economy.
Following the release of this data, the value of sterling against other major currencies remained relatively stable on Thursday as investors digested