UK, Japan officially enter recession as GDP fell in last 3 months of 2023

The United Kingdom and Japan have officially entered recession after experiencing a Gross Domestic Product (GDP) decline in the last three months of 2023.

The UK experienced a 0.3% GDP decline in the last three months of 2023, from October to December, following a 0.1% drop in the previous quarter from July to September, according to the Office for National Statistics (ONS).

This follows a mild recession at the end of last year, which forecasters believe will be short-lived, the BBC reported.

Additionally, it was the mildest start to a recession since the 1970s, with the last five in the UK seeing the economy shrink by more than 1% — in 2023 it shrunk by 0.5%

The ONS figures show that all major sectors — services (by 0.2%), production (1%) and construction (1.3%) — contracted but experts believe that the dip may not last long because the UK jobs market remains strong and wage growth is outpacing inflation.

Furthermore, there was some increase last year, albeit weak, with the GDP expanding by 0.1% in certain areas when compared to the previous year.

Chancellor Jeremy Hunt insists the economy is "turning a corner" but admits low growth is "not a surprise" at the moment. Meanwhile, shadow chancellor Rachel Reeves says Prime Minister Rishi Sunak's promise to grow the economy is in "tatters".

Nevertheless, the UK is not alone as the European Union narrowly avoided recession in the second half of 2023, with Germany's output shrinking by 0.3% in the final quarter.

Additionally, Japan unexpectedly slipped into a recession at the end of last year, losing its title as the world's third-biggest economy to Germany and raising doubts about when the central bank would begin to exit its decade-long ultra-loose monetary policy.

Japan's GDP fell an annualised 0.4% in the October-December period after a 3.3% slump in the previous quarter, government data showed on Thursday, confounding market forecasts for a 1.4% increase.