Huh, the UK Economy? Still Kinda Not Great
The first official figures for the UK economy in the final quarter of 2023 appear a touch better than the doom‑screamed forecasts, but a 0.1% uptick can still be splashed around as “good news.” Still, the nitty‑gritty tells a slightly different story.
Slide‑by‑Slide: What’s Really Happening
- Output per person takes a dip for a second straight quarter – meaning the headline growth is bolstered more by population growth than by actual productivity.
- Only government spending (and its folks‑money) pushed the economy forward, and that came out of the bank with fresh borrowing.
- There’s also a “stock‑building” effect where firms pumped out goods they couldn’t sell—essentially a short‑term filler.
- The private sector shrank, matching the gloom in business survey chatter.
Why It Feels Worse Than It Looks
Even if the UK economy is dancing along the edge of a recession, it’s likely falling short of the OBR’s optimism and the numbers baked into the Budget.
The foundations of growth in the private sector are being knocked over by:
- Higher taxes and additional costs announced in the Budget.
- More state intervention in labour and energy markets.
- Job fears weighing on consumer spending, despite real‑income gains.
- Business investment being sidelined by increased government borrowing.
What’s the Outlook?
Growth could see a modest lift throughout 2025 as public‑spending benefits start to flow, but the tone is very much “flirting with recession for the year.” The private sector feels the heat already.
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