How can a recession impact me and what does it entail?

The UK has officially exited the recession as the economy showed growth in the first three months of the year, according to official figures released today. Chancellor Jeremy Hunt expressed optimism, stating that the economy is “returning to full health.” However, Labour’s shadow chancellor Rachel Reeves cautioned against premature celebrations, saying it was not the time for a “victory lap.”

The Office for National Statistics (ONS) measures the health of the economy through Gross Domestic Product (GDP), which represents the value of all goods and services produced in the UK. When GDP increases, the economy grows, leading to higher average incomes. Conversely, a decrease in GDP indicates economic decline, which can impact people’s finances.

A recession is defined as two consecutive quarters of GDP decline. The UK experienced a recession with a 0.1% contraction between July and September last year, followed by a further 0.3% decline between October and December. However, the latest ONS data shows a 0.6% growth in the economy between January and March 2024, marking the end of the recession.

In comparison to other countries, the UK had been one of the weaker performers in the G7. The US, for example, saw a 2.5% growth in 2023, outperforming other advanced economies. It is also projected to lead the G7 in economic performance in 2024. The road to recovery may still be challenging, but the UK’s exit from the recession is a positive step towards economic stability.