Chancellor denies UK recession is proof of government failure

The news the UK has fallen into a recession comes around a year after Rishi Sunak promised to grow the economy - Labour says that pledge is 'in tatters'.

Words by Daniel Boal, ITV News Producer

The chancellor has denied that the UK slipping into a recession at the end of last year is proof of government failure to deliver on its key economic promises.

The news has dealt a hammer blow to the prime minister's pledges to grow the economy, but Jeremy Hunt told ITV News on Thursday that "we didn't promise to do them all at the same time."

He added: "It's not possible to grow the economy while you are tackling high inflation."

The Office for National Statistics (ONS) estimates that gross domestic product (GDP) fell by a worse-than-expected 0.3% between October and December, following a decline of 0.1% in the previous three months.

It means that the economy entered a technical recession, as defined by two or more quarters in a row of falling GDP.

And, while economists believe that the recession will be short-lived, the figures are still damning for Prime Minister Rishi Sunak, who has previously pledged economic growth as one of his five key priorities.

'You promised to grow the economy, we're in recession. Have you failed?': ITV News Economics Editor Joel Hills questions Chancellor Jeremy Hunt

On recession, Mr Hunt told ITV News that "weaker growth had always been expected" while the government "prioritises inflation."

He said: "We always expect growth to be weaker while we prioritise tackling inflation that means higher interest rates.

“If we stick to our guns, independent forecasters say that by the early summer we could start to see interest rates falling and that will be a very important relief for families with mortgages.”

When the Conservatives' economic policy was announced last year, they listed their three priorities as: halving inflation, reducing debt and growing the economy.

Having halved inflation, but overseen a rise in debt and the economy fall into recession, ITV News' Economics Editor Joel Hills asked the chancellor if only securing one pledge out of three was proof of government failure?

Mr Hunt responded: "We didn’t promise that we were gonna do them all at the same time. It's not possible to grow the economy while you are tackling delivering when.

"When the prime minister made that pledge a year ago, he and all the forecast said that we were gonna fall in a deep recession last year.

"That was expected, it didn’t happen so what’s actually happened economy has been more resilient.

"But, he always said that the most important thing for families up and down the country feeling cost of living pressure is tackling inflation and when we’ve done that you then have a situation we can start to grow healthy and sustainably."

Shadow Chancellor Rachel Reeves said the prime minister’s promise to grow the economy was “in tatters”.

She said: “The prime minister can no longer credibly claim that his plan is working or that he has turned the corner on more than 14 years of economic decline under 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.”

Speaking at a press conference in central London, Ms Reeves said figures showing the economy fell into a recession in 2023 exposes Mr Sunak as a prime minister “completely out of touch with the realities on the ground”.

"Frankly does anything work better than when the Conservatives came into power 14 years ago?", she questioned.

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The Lib Dems have since gone on to accuse Rishi Sunak of having “savaged the British economy”.

Responding to the news the UK has entered recession, Liberal Democrat leader Sir Ed Davey said: “Rishi’s recession has savaged the British economy by decimating growth and leaving families to cope with spiralling prices.

“Years of Conservative chaos and a revolving door of Conservative chancellors has culminated in economic turmoil.

“It’s hardworking Brits forced to pick up the tab for this mess, through high food prices, tax hikes and skyrocketing mortgage bills.

“This year the country will have the chance to kick out this incompetent and out of touch government once and for all.”

What do fourth quarter figures tell us about the UK economy?

The fourth quarter contraction was the biggest since the first three months of 2021, at the height of the pandemic.

Most economists were forecasting a 0.1% decline in GDP between October and December.

The ONS said output fell 0.1% in December after downwardly-revised growth of 0.2% in November, while the contraction in October was also worse than first thought, at 0.5% against the 0.3% fall initially estimated.

Across the year as a whole, the economy grew, but by an anaemic 0.1%, down from 4.6% growth in 2022 and – when stripping out the pandemic-hit plunge seen in 2020 – the weakest expansion since the aftermath of the financial crisis in 2009.

The ONS said the contraction was broad-based across the economy in the fourth quarter.

The pound was lower after figures showed the UK fell into recession after a weaker-than-forecast contraction in the final three months of 2023.

Sterling was 0.1% down at 1.26 US dollars and also 0.1% lower at 1.17 euros.

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