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Social Justice

UK recession is ‘devastating’ for people living in poverty who have ‘nothing left to cut back’

A recession in the UK is “no surprise” as households have had to keep cutting back on spending, but it’s another blow for families in poverty

A recession in the UK is yet more “devastating” news for the millions of people living in poverty who are struggling to afford the essentials but “no surprise”, charities have said.

The economy fell into a recession at the end of last year, as households cut back on spending and the Bank of England hiked interest rates in response to inflation.

Despite the government’s promise to boost the economy, GDP fell by 0.3% in the three months up to December. It followed a 0.1% drop between July and September.

A recession is defined as two consecutive three-month periods of the economy shrinking.

Lydia Preig, the head of economics at the New Economics Foundation, said: “It’s no surprise the UK fell into a recession at the end of last year. This government’s long standing failure to invest in the economy combined with the Bank of England’s panicked interest rate rises have caused serious damage. 

“Ordinary people are now suffering the effects of these decisions, with low wages and falling standards of living likely to plague us for years. This will be particularly devastating for people already in poverty who have nothing left to cut back on.

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“To combat this we need a drastic change in direction with serious government investment in green industries, public services, housing and skills, and more support for those on the lowest incomes, including investment in our social security system.”

The economy stayed “broadly flat” in 2023, growing by just 0.1% overall, according to the Office for National Statistics (ONS).

The fall at the end of the year was steeper than expected – economists had predicted it would drop by 0.1%. It’s likely to be a mild and short-lived recession, unlike that seen during the financial crash of 2008 and 2009.

For families who have been left with nothing left to sacrifice in the cost of living crisis, it is just further confirmation of the bleak state of the economy which they are already living. Households have had to cut back on spending so much that the UK is in a recession.



Alfie Stirling, the chief economist at the Joseph Rowntree Foundation, said: “Today’s news that the economy entered a technical recession is concerning, but it will not be front of mind for the millions already in unjustifiable hardship.

“Fridges are either off or empty as already eye-watering food prices continue to rise. Loan and mortgage repayments are being missed as elevated interest rates crush family finances. And jobs are increasingly at risk as the labour market continues to deteriorate.

“Just weeks before the Spring Budget, addressing this crisis of economic security, from individual families to the nation as a whole, must be the first priority for policymakers. This starts with reforming universal credit to reflect the actual cost of essentials, and a revitalisation of key services across care, housing, and job support.

“There is no quick fix. Business investment may be the lifeblood of a growing economy, but social security and public services provide the heartbeat.”

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