Kwasi Kwarteng has admitted for the first time that the UK is now in recession.
The chancellor conceded the economy had “technically” shrunk in the last two quarters.
But he insisted his tax-cutting mini-budget will ensure the dip will be “shallow” and the economy will be start growing again.
The Bank of England yesterday said it believed the UK was now in recession – something Liz Truss had insisted could be avoided during the Tory leadership election.
In an interview with the BBC’s Chris Mason, Kwarteng said: “Technically, the Bank of England said that there was a recession, I think it’ll be shallow and I hope that we can rebound and grow.”
Asked if he was admitting there was a recession, the chancellor said: “I’m not acknowledging that, no no I said that there is technically a recession.
“We’ve had two quarters of very little, negative growth and I think these measures are gonna help us drive growth.”
Asked what the difference is between a recession and a technical recession, the chancellor said: “There’s a big difference. Technically, the economists say two consecutive quarters, but I think we’re going to grow the economy, that’s what we’re doing that’s what we’re focused on.”
Kwarteng and Truss have insisted their tax-cutting strategy will eventually see the economy growing by 2.5 per cent a year.
But the value of the pound has plummeted in the wake of the mini-budget, while interest rates are tipped to rise even further.
Economic experts have also rounded on the chancellor, with the highly-respected IFS accusing him of “betting the house” on economic growth.