Economy shrank by 0.2% in third quarter putting UK on brink of recession
The UK economy shrank by 0.2% in the last quarter, putting it on the brink of recession.
The Office for National Statistics reports that UK gross domestic product (GDP) shrank 0.2% in Quarter 3 (July to Sept) 2022.
If the economy contracts again over the last three months of this year the UK will have entered a recession.
A country is in recession when its economy shrinks for two three-month periods in a row.
Monthly estimates published today (11 November 2022) show that GDP fell by 0.6% in September 2022 which was affected by the bank holiday for the State Funeral of Her Majesty Queen Elizabeth II, where some businesses closed or operated differently on this day.
Last week the Bank of England warned the UK was heading for the longest recession in a century, lasting until the middle of 2024
Chancellor of the Exchequer Jeremy Hunt said he was “under no illusion that there is a tough road ahead — one which will require extremely difficult decisions to restore confidence and economic stability.”
“But to achieve long-term, sustainable growth, we need to grip inflation, balance the books and get debt falling.”
“There is no other way.”
“While the world economy faces extreme turbulence, the fundamental resilience of the British economy is cause for optimism in the long run.”
GDP fell 0.2% in Quarter 3 (July to September) 2022 with:
▪️ services flat (0.0% growth)
▪️ manufacturing falling 2.3%
▪️ construction growing 0.6%➡️ https://t.co/IsdBc7KmAM pic.twitter.com/lwcKVBUOOC
— Office for National Statistics (ONS) (@ONS) November 11, 2022
The ONS report states : “In output terms, there was a slowing on the quarter for the services, production and construction industries; the services sector slowed to flat output on the quarter driven by a fall in consumer-facing services, while the production sector fell by 1.5% in Quarter 3 2022, including falls in all 13 sub-sectors of the manufacturing sector.”
“In expenditure terms, real household expenditure fell by 0.5% in Quarter 3 2022, while there were also large positive movements in international trade flows in the third quarter.”
“Compared with the same quarter a year ago, the implied GDP deflator rose by 5.8%, primarily reflecting higher cost pressures faced by households.”
Responding to the figures Shadow Chancellor of the Exchequer Rachel Reeves Tweeted:
“GDP figures show UK economy shrank by 0.2% in the third quarter.”
“This is extremely worrying – and is another page of failure in the Tories’ record.”
“Britain has so much potential to grow.”
“Labour’s Green Prosperity Plan and our partnership with business will unlock that.”
TUC General Secretary Frances O’Grady said:
“As the government prepares for the Autumn Statement, ministers need to act now to boost the economy and to protect workers from soaring prices and the threat of one million lost jobs.”
“Sunak and Hunt must not repeat the mistakes of Cameron and Osborne. Tory cuts over the past 12 years have meant the slowest recovery for a century.”
“The government has a choice. Rather than a recession, they should choose more funding for the vital public services like schools and our NHS, pay rises for our dedicated public servants that match the cost of living, and investment in green tech to meet the challenge of net zero.”
“This is how you build a fairer and more resilient economy.”
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