Preliminary figures released by the Office for National Statistics (ONS) have revealed that the British economy has officially entered a recession in the latter half of 2023. The grim data indicates a contraction in GDP for two consecutive quarters, marking what economists term as a "technical recession."

According to the ONS, Britain's GDP experienced a decline of 0.3 percent in the final quarter of 2023, following a 0.1 percent contraction in the preceding July-September period. These consecutive quarterly declines have sounded alarm bells, signaling the onset of economic recessionary conditions.

The downturn was widespread across key sectors of the economy, with industrial production plummeting by 1% in the fourth quarter, construction contracting by 1.3%, and the services sector, a traditional engine of economic growth, witnessing a 0.2 percent decline. Notably, the decline in the services sector was primarily driven by a notable drop in wholesale and retail trade, which contracted by 0.6 percent.

Furthermore, net trade saw a decline, alongside reductions in both government and household spending, although these contractions were partially offset by an uptick in gross capital formation.

Comparatively, the British economy shrank by 0.2 percent in the final quarter of 2023 compared to the same period in 2022. This downturn follows a modest growth of 0.2 percent recorded in the third quarter of 2022.

For the entirety of 2023, UK GDP saw a meager increase of just 0.1 percent, a stark contrast to the robust growth of 4.1 percent witnessed in 2022. Despite these concerning figures, the Bank of England (BoE) anticipates a potential recovery in 2024.

The release of weaker-than-expected GDP data has prompted significant market reactions, with money swaps traders now pricing in a 100% chance of a rate cut by the BoE totaling 75 basis points by the end of the year. Additionally, there is a heightened expectation of a first-rate cut at the central bank's June meeting, with markets currently pricing in a 70% likelihood of such an occurrence.