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The Prime Minister, Jeremy Hunt, has been cautioned that the United Kingdom may already be experiencing a technical recession, despite the government’s assertions of a rebounding economy.
Mr Hunt has emphasized that the government’s strategy “is effective,” as he persists in offering the possibility of new tax reductions in his March Budget.
However, prominent economists have indicated that a recent examination of the UK’s underwhelming economic growth data indicates that the nation is experiencing a significant downturn.
According to Martin Beck, the top economic advisor for the EY Item Club forecasters, it is likely that the British economy experienced a decline at the end of 2023 and entered a period of recession.
Mr. Beck stated that if there is a decrease in the final quarter following a 0.1 percent decrease in July to September, it would result in a “technical” recession with two consecutive negative quarters.
The speaker stated on BBC Radio 4’s Today programme that the GDP, or gross domestic product, decreased in the third quarter and based on recent data for the fourth quarter, there is a likelihood of another slight decrease.
Rishi Sunak and Jeremy Hunt are facing mounting pressure to increase economic growth, control inflation, and reduce taxes.
The EY Item Club predicts a slight improvement in the economy this year, changing its projected growth for 2024 from 0.7% to 0.9%.
However, the slow and uncertain outlook is not aiding Mr. Sunak and Mr. Hunt in their efforts to prove that they have successfully revived the economy, one of their top five promises, as the PM urges voters to “stay on course.”
The alert about the economic downturn is accompanied by Mr Sunak’s rejection of the suggestion to replace Mr Hunt. He maintains that he will remain as chancellor during the upcoming general election this year.
During a visit to Buckinghamshire, Mr. Sunak was asked if Mr. Hunt would maintain his position during the country’s elections. Mr. Sunak responded, “Yes.”
The Prime Minister stated: “We want to take further action when it is appropriate, but as demonstrated by the recent inflation figures, inflation does not decrease in a linear fashion. It is not guaranteed, and there is still more work to be done. That is why it is crucial to adhere to our plan.”
Last year, there were reports indicating that Mr Hunt intended to remain in his position until the autumn statement and Budget, but there were doubts about his future beyond that. Mr Sunak has until January 2025 to call for an election, but he has stated his goal is to hold one in the latter half of 2024.
Once again, Mr Hunt has indicated that he plans to decrease taxes during his Budget announcement on 6 March. In an article for the ConservativeHome website, he stated that the Conservative party has a history of reducing taxes and promised that citizens will recognize this as we move past the challenges of the past few years.
Over the weekend, Mr. Hunt likened himself to former chancellor Nigel Lawson who was known for cutting taxes. He and the Prime Minister have hinted at the possibility of more giveaways during the fiscal event on March 6th.
In an opinion piece for The Mail on Sunday, he asserted that the government’s strategy is successful and compared his achievements to those of a former prominent member of the party who reduced personal taxes during their time in the Margaret Thatcher administration.
At the moment, there is pressure on Mr Sunak and Mr Hunt from Conservative Members of Parliament to increase the funding for struggling councils.
Over 40 members of the Conservative party have written a letter to the Prime Minister expressing concern that without urgent funds, numerous local councils will have to reduce essential services and raise council taxes during an election year.
Source: independent.co.uk
