Monthly GDP of the UK 1997-2023

The gross domestic product of the United Kingdom grew by 0.2 percent in September 2023, with the UK economy slightly larger than it was in February 2020, just before the start COVID-19 lockdowns. After a record 20.9 percent decline in GDP in April 2020, the UK economy quickly returned to growth in the following months. By the end of 2020 however, economic growth stalled, and in 2021 fluctuated between a low of -2.9 percent in January to a high of 3.1 percent that April.

UK economy flatlined in 2022

In January 2023 the UK economy was approximately the same size as it was a year earlier, indicating an economy in dire shape. Despite weak economic growth, inflation was rampant, peaking at 11.1 percent in October 2022. High energy costs, as well as high interest rates later in the year created an unfavorable enivironment for UK consumers and businesses. Low business investment, weak productivity growth, and a very tight labor market are also symptoms of an economy struggling to adapt to a post-pandemic, and post-Brexit future. Despite being a year to forget for the UK economy, there is a chance 2023 could be worse. Inflation is expected to decline but remain stubbornly high, while a shallow but persistent recession is expected, with a 1.4 percent decline in GDP forecast for 2023.

Cost of living crisis continues into 2023

For a majority of people in the UK, their cost of living at the start of 2023 was higher than it was a year earlier, with 92 percent of households reporting higher living costs in February 2023. High inflation has put households under severe pressure, and while wage growth is strong, this has not been able to keep pace with inflation for several months. Despite support packages from the government, soaring energy and food costs have hit the poorest UK households particularly hard. According to recent estimates, living standards in the UK fell by 4.3 percent in 2022/23, and will fall again in 2023/24, before the situation improves in 2024/25.