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UK at risk of 'technical recession' despite GDP growth in November: 'This isn't a thriving economy'

November saw a 0.3% rise in GDP but experts have warned a technical recession could be on the cards in 2024 without investment in pay and productivity

Chancellor Jeremy Hunt will be tasked with stopping the UK economy slipping into a technical recession

Chancellor Jeremy Hunt will be tasked with stopping the UK economy from slipping into a technical recession as the general election looms. Image: Kirsty O'Connor/HM Treasury

The UK could be heading for a ‘technical recession’ despite seeing the economy grow 0.3% in November, experts have warned.

Official figures showed Black Friday sales bolstered retailers alongside a 0.4% rise in service output which saw gross domestic product (GDP) rise slightly between October and November 2023.

But real GDP is estimated to have fallen by 0.2% in the three months up to November when compared to the previous quarter up to August.

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That leaves the UK at risk of falling into a ‘technical recession’, which would occur if the economy recorded two consecutive quarters of negative growth.

With uncertainty over whether the economy will pick up in 2024, IPPR’s George Dibb said the government must invest in pay and productivity to prevent UK growth “bouncing around zero”.

“The small boost to UK output shown in today’s GDP release is a poor consolation for years of stagnant pay and sluggish productivity growth” said Dibb, the think tank’s associate director for economic policy.

“This isn’t a thriving economy – our growth is still bouncing around zero. It’s time for policymakers to get on the front foot and focus on the underlying drivers of the economy. This means investment, investment, investment. 

“With high interest rates, rising housing costs and low investment, the Treasury and the Bank of England need to act quickly to revive the British economy.” 

The future direction over the economy is likely to be a key battleground in this year’s general election – a YouGov poll from earlier this month found the state of the economy was the top issue for the voters the polling company quizzed. 

With a cost of living crisis following the impact of the pandemic on the economy, inflation surged after Liz Truss and Kwasi Kwarteng’s disastrous mini-Budget.

Inflation has fallen in recent months as the Bank of England has raised interest rates but chancellor Jeremy Hunt warned economic growth will still be hit until the inflation falls to the target of 2%.

“While growth in November is welcome news, it will be slower as we bring inflation back to its 2% target,” said Hunt.

“But we have seen that advanced economies with lower taxes have grown more rapidly, so our tax cuts for businesses and workers put the UK in a strong position for growth into the future.”

But Rachel Reeves, Labour’s shadow chancellor, blamed the government for low growth.

“The Conservatives have presided over 14 years of economic failure that has left working people worse off,” said Reeves.

“A decade of low economic growth has left Britain with the highest tax burden in 70 years, with families set to be £1,200 a year worse off under the Tories’ tax plans.

“It’s time for change. Rishi Sunak should call an election and give the people the chance to vote for a Labour government that will get Britain’s future back.”

November saw a 0.3% rise in production output following a fall of 1.3% in October – a month hit by strikes and heavy rain.

The construction sector fell by 0.2% after a fall of 0.4% in the previous month.

Unite general secretary Sharon Graham echoed IPPR’s calls for investment in workers to boost economic growth.

“Today’s figures only confirm what workers see and hear every single day. Our economy needs intensive care as the result of low investment, crumbling infrastructure and a cost-of-living crisis which makes daily life unaffordable,” said Graham.

“This is a result of choices made by our politicians over many years. It’s time we invested to improve the economy for the benefit of all.”

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