Despite a lack of GDP advancements in February, Chancellor Jeremy Hunt insists that the UK is not facing a recession now, or in the near future.
After various public sector strikes, the Office for National Statistics has found no advancements in the UK’s GDP in February. It was noted by the Office for National Statistics (ONS) that a growth in the construction sector was outweighed by falls in services, specifically, education, as industrial action taken by teachers has been most detrimental to growth. Crucially, February saw the UK’s largest strike as 500,000 workers walked out due to disputes over pay and working conditions. This economic standstill followed an overall 0.4% GDP increase in January.
Yet, Jeremy Hunt firmly asserts that the UK’s economic future remains ‘brighter than expected’. Regardless of minimal GDP growth since last spring, widespread industrial action, soaring energy costs and interest rates, a slow return to pre-pandemic employment rates, and a limited trade performance, Hunt continues to brush away the possibility of entering a recession.
The current economic state and predictions
The International Monetary Fund (IMF) estimated that the UK will be amongst the least successful economies in the G20 this year. Even Russia, in the aftermath of the invasion of Ukraine, is predicted to do better than the UK. This follows the UK’s fall to being the worst performer in the G7 last year.
The UK’s economy is predicted to shrink by 0.3% in 2023. However, this is an improvement to earlier predictions which would’ve seen a 0.6% decrease. Consequently, Jeremy Hunt has stated that “The IMF now say we are on the right track for economic growth. By sticking to the plan we will more than halve inflation this year, easing the pressure on everyone”.
Nevertheless, the Bank of England’s governor Andrew Bailey has not dismissed the idea of a recession entirely –As interest rates rose again to 4.25%, he asserted that he is “much more hopeful” for the economy, and that an “immediate” recession is not looming.
UK “lagging on the global stage”
Shadow chancellor, Rachel Reeves did not share Jeremy Hunt’s optimism and said the figures showed the UK “lagging behind on the global stage with growth on the floor”. Moreover, she pointed to the economic struggles that are hitting people across the UK as she said that “living standards are falling at their fastest rate since records began” as families are “worse off” and that “high streets are in decline”. She also contended that a poorer economy “leaves us vulnerable to shocks”.
Angela Rayner, deputy leader of the Labour Party, said: “Someone starting out their career today would have to work until the year 2423 before they’d see a penny from the Tories’ tax giveaway to the top one percent.
Following the UK’s worsening economic downturn after Liz Truss’ short time in office, the Government is facing mounting pressure to stabilise the economy. A number of forecasters think the chances of a recession in the UK this year are declining. An economy is usually said to be in recession if it shrinks for two consecutive three-month periods.
However, the realities that the UK is facing cannot be ignored – as inflation sits at a record 40 year high, the cost of living has sky-rocketed, plunging more and more into poverty as the cost of necessities such as food and energy are burdening much of the population. Jeremy Hunt’s positivity about the economy is therefore questionable, as ordinary people continue to suffer.
To sufficiently support working-class people, and gain the population’s trust, the Conservative Party has much more work to do, especially ahead of a General Election.