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UK recession confirmed but economy shows signs of steadying

Date: 28 March 2024

1 minute read

28 March 2024

If you are covering the revised estimate of Q4 2023 UK GDP from the ONS, please see the following comment from Lindsay James, investment strategist at Quilter Investors:

"While today’s GDP revision for Q4 of the previous year confirms a technical recession, there are signs elsewhere that the economy has gained a marginal momentum as we progress into 2024.

"It would be premature to declare that the economy has completely turned a corner; however, the indicators suggest that the recession experienced was relatively brief. The current expectations align more with a stabilisation in the first half of 2024 rather than a robust bounce-back, primarily due to the ongoing impact of high interest rates and their delayed effects on the market. Governor Andrew Bailey’s recent remarks that interest rate cuts are now ‘in play’ for future meetings hint at potential stimuli for growth in the latter part of the year.

"Nevertheless, while there are indications that business activity is on an upswing, the threat of inflationary pressures making a comeback cannot be ignored. Despite the base effects and a reduction in the Energy Price Cap contributing to a decrease in headline figures in the near term, the possibility of experiencing further inflationary surges persists. Such developments could constrain the Bank of England’s ability to implement rate cuts in the subsequent quarters.

"In summary, the UK economy shows signs of steadying, yet caution remains paramount as we navigate through the complexities of inflation and interest rate dynamics."

Megan Crookes

External Communications Executive