The UK economy has gradually improved since the year started, indicating a shift away from the technical recession downturn.
Gross Domestic Product (GDP) m/m Data
The UK witnessed a recession by the end of 2023, where the country’s GDP came in negatively for two consecutive quarters, indicating a period of economic decline.
The economy experienced a significant downturn of -0.5% in September 2023, followed by -0.3% in December 2023, marking a recession (Figure 1). Despite these challenges, there have been signs of recovery, with the rate of decline showing a gradual decrease over time.
The most recent Gross Domestic Product (GDP) m/m data, released on May 10, 2024 (Figure 1), indicates consistent positive growth since March 13, 2024, signaling an expansion in economic activity and marking the end of the recession.
Figure 1: Gross Domestic Product (GDP) m/m % in the UK, Forex Factory
Claimant Count Change Data
The Claimant Count Change, released by the Office for National Statistics, measures the number of individuals claiming unemployment-related benefits. The most recent figure, released on May 14, 2024, resulted in 8.9K, a notable shift from the previous adjusted reading of -2.4 K (Figure 2). Additionally, it represents the lowest count of unemployment claimants in the UK since September 12, 2023, signaling a significant improvement in the labor market.
Figure 2: Claimant Count Change in the UK, Trading Economics
Overall Analysis
Towards the end of 2023, despite facing a recession, the UK was facing high inflation rates. This has caused the Bank of England (BOE) to increase the interest rate as a measure to combat inflation. Following a series of 14 rate hikes, the BOE has decided to maintain its interest rate at 5.25% for six consecutive sessions.
In parallel, inflation has shown a gradual decline, edging closer to the healthy 2% level, while also displaying signs of economic activity improvement. These developments highlight the comeback of the UK economy and its journey towards advancement.
The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.