THE UK economy fell into a recession during the final three months of 2023, according to the latest figures.

The Office for National Statistics (ONS) estimated that gross domestic product (GDP) fell by 0.3% in the fourth quarter of the year, following a decline of 0.1% in the previous three months.

But what is a recession and when is the last time the UK was in one?

What is a recession?

The UK is considered to be in a recession if GDP falls for two successive three-month periods, or quarters.

The ONS publishes figures for the UK’s GDP, which measures the value of all the goods and services produced in the UK.

When the economy shrinks, GDP falls and that’s a sign the economy is performing poorly.

When was the last recession?

The last time the UK’s economy went into recession was in 2020 at the height of the Covid pandemic.

It lasted for six months, but the 20.4% fall in the economy between April and June was the largest on record.

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Prior to this, the previous recession started in 2008 as a result of the global financial crisis, and lasted for five quarters.

How can a recession affect me?

When the economy grows, this can lead to more jobs and companies may be able to pay more to employees and shareholders.

Higher wages and larger profits seen in a growing economy can also help to generate more money for the government through taxes.

However, when the economy shrinks, these things can go into reverse.

During a recession, less money is circulating which means less money for workers from their employers, less being spent in shops and restaurants and less going to the government in tax from wages.

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People may find it harder to find work or get a pay rise while businesses and shops may even be forced to close as a result.

Getting a loan or mortgage can also prove more difficult as banks tighten their lending criteria.