Monthly GDP growth of the UK 2022-2024
The UK economy shrank by 0.1 percent in September 2024 after growing by 0.2 percent in August. Since the huge 19.6 percent decline in GDP in April 2020, the UK economy has gradually recovered and is now around 3.1 percent larger than it was before the COVID-19 pandemic. After the initial recovery from the pandemic, however, the UK economy has effectively flat lined, fluctuating between low growth and small contractions since January 2022.
UK economy in recession at the end of 2023
Due to two consecutive quarters of negative economic growth, in late 2023 the UK economy ended the year in recession. After not growing at all in the second quarter of 2023, UK GDP fell by 0.1 percent in the third quarter, and then by 0.3 percent in the last quarter. For the whole of 2023, the economy grew by 0.1 percent compared to 2022, and for 2024 is forecast to grow by 0.7 percent. With the next UK general election set to take place by January 2025, this weak economic growth comes at a bad time for the ruling Conservative party. Despite usually seen as the best party for handling the economy, the Conservatives currently trail the Labour party on this issue, by 26 percent to 22 percent of respondents.
Cost of living crisis ongoing in 2024
This low economic growth coupled with high inflation has fueled the worst cost of living crisis in a generation in the UK. Although inflation finally fell after reaching a peak of 11.1 percent in October 2022, prices were still rising at a rapid pace throughout 2023. Furthermore, while increases in energy prices slowed early in the year, food prices were still rising quite rapidly in late 2023. As of December 2023 for example, food inflation was 6.9 percent, compared with -2.1 percent for housing and energy costs. With inflation rising faster than wages, for a long period between 2021 and 2023, UK consumers saw a significant fall in their living standards. Real household disposable income fell in 2022/23 and is expected to again in 2023/24, and 2024/25.
