Yahoo Finance UK economy shrinks by higher-than-expected 0.3% as recession looms
The UK economy contracted by a little more than first estimated in the third quarter of this year, with GPD falling by 0.3% between July and September, according to the ONS.
In initial figures released last month, the ONS estimated that the GDP had contracted 0.2% in the third quarter but the revised figures show that the UK economy took a bigger hit than expected as business investment performed poorly.
Two consecutive contractions would mean the economy is in recession.
The ONS said the economy also grew less than first estimated throughout the first half of the year, with revisions showing the UK eked out growth of 0.6% in the first quarter and 0.1% in the second quarter.
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The ONS has previously said growth stood at 0.7% and 0.2% in those quarters respectively.
During the third quarter of the year, output across the production sector fell by 2.3% — including falls in all 13 manufacturing sub-sectors.
GDP fell 0.3% in Quarter 3 (July to Sept 2022), revised down from a 0.2% fall, with:
▪️ services at 0.1% (revised up from 0.0%)
▪️ manufacturing at -2.8% (revised down from -2.3%)
▪️ construction at -0.2% (revised down from 0.6%)
➡️ https://t.co/ALn0Sl72UV— Office for National Statistics (ONS) (@ONS) December 22, 2022
Real household expenditure fell by a revised 1.1% between July and September, which was driven by declines in net tourism, transport, household goods and services, and food and drink.
ONS director of economic statistics Darren Morgan said: “Our revised figures show the economy performed slightly less well over the last year than we previously estimated, with manufacturing and electricity generation notably weaker.
“Household incomes continued to fall in real terms, albeit at a slower rate than in the previous two quarters, while — taking account of inflation — household spending fell for the first time since the final COVID-19 lockdown in the spring of 2021.”
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Business investment fell by 2.5% in quarterly terms, compared with a previous first estimate of a 0.5% drop.
The figures put the UK at the bottom in the Group of Seven nations (G7) in terms of quarterly economic growth.
Chancellor Jeremy Hunt said: “Getting prices down so people’s wages go further is my top priority, which is why we are holding down energy bills this winter and providing extra cost of living payments for the most vulnerable.
“To get the British economy back on track, we have a plan that will help to more than halve inflation next year, while laying the foundations for long-term growth through record investment in infrastructure and new industries.”
Economists predict the UK will shrink in the fourth quarter of 2022, which would be a technical recession, and struggle in 2023 too.
