Quarterly GDP growth of the UK 2019-2024

Gross domestic product in the United Kingdom grew by 0.1 percent in the third quarter of 2024, compared with 0.5 percent in the previous quarter. The UK economy ended 2023 in recession, with negative growth reported in the last two quarters of 2023. GDP growth in the third quarter of 2023 was -0.1 percent, followed by -0.3 percent in the fourth quarter. In the third quarter of 2020 the UK experienced record setting growth of 16.8 percent, which itself followed the record 20.3 percent contraction in Q2 2020. 

Sunak's economic struggles

With the next UK election set to take place by January 2025, the current Prime Minister, Rishi Sunak, will have hoped for better economic news heading into 2024. One year earlier, at the start of 2023, he banked much of his credibility on turning the UK's economies woes around, pledging to halve inflation, while growing the economy and reducing the national debt. Although inflation did fall significantly, from 10.1 percent in January to four percent in December, annual economic growth was just 0.1 percent, and as already seen, was shrinking towards the end of the year. The national debt has also increased slightly, although it is expected to fall towards the end of the 2020s.

Strong labor market defies weak economy

After a robust 2022, the UK labor market remained resilient throughout 2023. The unemployment rate at the end of 2023 was 3.8 percent, the same as at the start of the year, and one of the lowest rates on record. While job vacancies have fallen from their 2022 peak, there were still 932,000 vacancies at the start of 2024 compared with around 820,000 in the months before the COVID-19 pandemic. It is unclear if the recession at the end of 2023 will catch up with the UK's job market. Recent forecasts from the Autumn 2023 budget suggest a modest increase in 2024, and 2025, with an annual unemployment rate of 4.6 percent anticipated.