Figures show the economy contracted by 0.3 per cent in the final three months of the year.
Most economists were forecasting a 0.1 per cent decline in gross domestic product (GDP) between October and December.
The 0.3 per cent dip means the UK has dipped into a technical recession, defined by two or more quarters in a row of falling GDP.
It marks the first time the UK has entered recession since the first half of 2020, when the initial Covid-19 lockdown sent the economy plunging into reverse.
The figures deal a blow to Prime Minister Rishi Sunak, who has promised to grow the economy as one of his five priorities.
Liz McKeown, ONS director of economic statistics, said: “Our initial estimate shows the UK economy contracted in the fourth quarter of 2023.
“While it has now shrunk for two consecutive quarters, across 2023 as a whole the economy has been broadly flat.
“All the main sectors fell on the quarter, with manufacturing, construction and wholesale being the biggest drags on growth.”
What is a recession?
According to business magazine Forbes, a recession is “a significant decline in economic activity that lasts for months or even years.
Forbes added: “Experts declare a recession when a nation’s economy experiences negative gross domestic product (GDP), rising levels of unemployment, falling retail sales, and contracting measures of income and manufacturing for an extended period of time.”
What causes a recession?
There are, according to Forbes, six main causes of a recession:
- A sudden economic shock
- Excessive debt
- Asset bubbles
- Too much inflation
- Too much deflation
- Technological change
How does a recession affect me?
During a recession, you could lose your job, as unemployment levels rise and it becomes harder to find a new one since more people are out of work and people who keep their jobs may see cuts to pay and benefits.
Investments – in things like stocks, bonds and property – can lose money.
Businesses are also affected, usually recording fewer sales during a recsion which increases the risk of bankruptcy.
Lenders tend to tighten standards for mortgages, car loans and other types of financing.
Forbes added: “Even if you plan ahead to prepare for a recession, it can be a frightening experience.”
