UK economy shrinks in third quarter

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The UK economic system shrank barely within the third quarter, in response to revised figures that spotlight the nation’s battle to shake off its low-growth efficiency.

The Office for National Statistics mentioned on Friday that gross home product fell by 0.1 per cent within the three months to September, a downward revision from earlier estimates of zero progress.

The economic system didn’t develop within the second quarter — a downward revision from the sooner estimate of a 0.2 per cent enhance.

The UK economy is caught in a lacklustre state because it struggles with excessive borrowing prices and the legacy of the worst inflationary upsurge for a era.

Output fell one other 0.3 per cent in October in contrast with the month earlier than, in response to separate figures launched earlier this month, suggesting there’s a danger of an additional quarter of contraction absent a pointy reversal in exercise.

Bank of England projections launched in November counsel there’s little instant prospect of a bounceback. The central financial institution forecast near-zero progress by means of subsequent 12 months, even because the worst of the inflation subsides.

The third-quarter GDP figures had been dragged decrease by weak enterprise funding and private spending numbers, with actual family expenditure sinking 0.5 per cent and the financial savings ratio going up. Enterprise funding dropped 3.2 per cent, barely lower than beforehand estimated.

The ONS reported a 0.2 per cent fall in output from the providers sector within the three months to September, which offset a 0.4 per cent rise in building output and barely greater manufacturing output.

The figures put UK output at 1.4 per cent above its pre-pandemic stage, which means the nation has lagged behind all its G7 companions excluding Germany. The US had been the strongest performer of the group of superior economies over the interval, the ONS mentioned, with GDP up 7.4 per cent in contrast with the ultimate quarter of 2019.

Chancellor Jeremy Hunt performed down the tepid numbers, saying Britain’s medium-term outlook was “much more optimistic than these numbers counsel”.

He added: “We’ve seen inflation fall once more this week, and the OBR [Office for Budget Responsibility] expects the measures within the Autumn Assertion, together with the biggest enterprise tax lower in trendy British historical past and tax cuts for 29mn working individuals, will ship the biggest enhance to potential progress on file.”

In an interview with the Financial Times this week, Hunt mentioned 2024 was “when we have to throw off our pessimism and declinism in regards to the UK economic system” and raised the prospect of the BoE slicing rates of interest.