Britain’s gross domestic product shrank by 0.3 percent in the last three months of 2023, after contracting 0.1 percent in the third quarter.

The Office for National Statistics (ONS) said in a statement on Thursday that Britain’s gross domestic product (GDP) shrank by 0.3 percent in the last three months of 2023, after contracting 0.1 percent in the third quarter.

A technical recession is commonly defined as back-to-back quarters of contracting GDP.

Sterling weakened moderately against the United States dollar and the euro shortly after the GDP data release.

The ONS said the fall in GDP in the fourth quarter of 2023 was the biggest since the first three months of 2021. A Reuters poll of economists had pointed to a smaller 0.1 percent fall in the October-to-December period.

Economic output dropped by 0.1 percent in monthly terms in December, after 0.2 percent growth in November, the ONS said. The Reuters poll had pointed to a 0.2 percent fall in December.

Britain’s economy has been stagnating for nearly two years. The Bank of England has said it expects it to pick up slightly in 2024, but slow growth this year would still represent a difficult backdrop for Prime Minister Rishi Sunak’s attempts to woo voters ahead of a national election expected later in 2024.

“Businesses were already under no illusion about the difficulties they face, and this news will no doubt ring alarm bells for government,” said Alex Veitch, director of policy and insight at the British Chambers of Commerce.

“The chancellor must use his budget in just under three weeks’ time to set out a clear pathway for firms and the economy to grow.”

Finance Minister Jeremy Hunt said there were “signs the British economy is turning a corner” and “we must stick to the plan – cutting taxes on work and business to build a stronger economy”.

Media reports said Hunt was seeking to cut billions of pounds from public spending plans to fund pre-election tax cuts in his March 6 budget, if penned in by tight finances.