‘Rishi’s recession’ exhibits Sunak can ‘now not declare his plan is working’

Rishi Sunak’s financial plans are “in tatters” after official figures confirmed the UK entered a recession, Labour mentioned.

Shadow chancellor Rachel Reeves mentioned the PM can “no longer credibly claim that his plan is working”. The announcement this morning is a hammer blow to Mr Sunak, who made rising the economic system certainly one of his 5 key pledges.

The replace from the Office for National Statistics (ONS) comes simply three weeks earlier than Jeremy Hunt delivers his Budget. Ms Reeves mentioned: “Rishi Sunak’s promise to develop the economic system is now in tatters. The prime minister can now not credibly declare that his plan is working or that he has turned the nook on greater than fourteen years of financial decline below the Conservatives that has left Britain worse off.

“This is Rishi Sunak’s recession and the news will be deeply worrying for families and business across Britain. It is time for a change. We need an election now to give the British people the chance to vote for a changed Labour Party that has a long-term plan for more jobs, more investment and cheaper bills.”

Meanwhile Lib Dem chief Sir Ed Davey mentioned: “Rishi’s recession has savaged the British economy by decimating growth and leaving families to cope with spiraling prices. Years of Conservative chaos and a revolving door of Conservative Chancellors has culminated in economic turmoil.

“It’s hardworking Brits compelled to select up the tab for this mess, by way of excessive meals costs, tax hikes and skyrocketing mortgage payments. This yr the nation could have the possibility to kick out this incompetent and out of contact authorities as soon as and for all.”

A recession is defined as two consecutive quarters – or two three-month periods in a row – where gross domestic product (GDP) declines. GDP is a measure of the size and health of the economy. In an update today from the Office for National Statistics (ONS), it was revealed GDP shrank by 0.3% between October and December 2023. This followed a decline of 0.1% between July and September 2023, therefore meeting the technical definition of a recession.

Mr Hunt said low economic growth was “not a shock”, but said the UK must stick to the Government’s plan. He said: “High inflation is the one largest barrier to development which is why halving it has been our high precedence. While rates of interest are excessive – so the Bank of England can deliver inflation down – low development isn’t a shock.

“But there are signs the British economy is turning a corner; forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low. Although times are still tough for many families, we must stick to the plan – cutting taxes on work and business to build a stronger economy.”

The announcement has been branded a “wake up call” for the Government. Pranesh Narayanan, analysis fellow on the Institute for Public Policy Research (IPPR), mentioned: “This time last year, the Prime Minister pledged to get the economy growing but today’s data, showing a mild technical recession, shows a stark lack of progress.

“Chronic underinvestment in hospitals, colleges, internet zero and infrastructure has created a crumbling public realm and a damaged economic system. This ought to be a wake-up name that spurs the Government to prioritise public funding moderately than irresponsible tax cuts. Let’s repair our issues now moderately than storing them up for later.”

The decline between October and December 2023 was bigger than had been expected by analysts. Most economists had been forecasting the economy to have shrunk by 0.1%. However, the data is just an estimate at the moment and can be revised at a later date.