- According to official data, gross domestic product fell by 0.1% in the third quarter.
The Bank of England is facing pressure to cut interest rates after figures showed the economy contracted over the summer.
Gross domestic product (GDP) fell by 0.1% in the third quarter, according to data from the National Statistics Office, revised down from expectations for no growth.
The economy was flat in the April-June period, with previous forecasts calling for GDP growth of 0.2%.
Analysts said the revised GDP figures would put further pressure on the central bank to lower interest rates from 5.25%.
Meanwhile, data this week showed inflation fell faster than expected, falling from 4.6% to 3.9% in November.
Investors are pricing in up to six quarterly rate cuts in 2024.
Related article
How can this be money help?
“This will put further pressure on the Bank of England to cut interest rates,” said Richard Carter, head of fixed rates research at Quilter Cheviot.
“The government will certainly want this, given that 2024 is likely to be an election year, but ultimately the Bank of England believes that the job is not done yet and that talking about rate cuts is time-consuming. I would stick to the argument that it is premature.”
Policymakers have previously warned that interest rates will remain high for an extended period of time as they aim to hit their 2% inflation target.
Governor Andrew Bailey said earlier this month that “we have come a long way this year” in the fight against inflation, adding: “We still have a ways to go.”
The central bank’s Monetary Policy Committee, which will meet on February 1, has kept interest rates unchanged at the highest level in 15 years for the past three meetings. But some economists say the central bank risks reacting too slowly to falling inflation.
Some links in this article may be affiliate links. We may earn a small commission when you click. This helps fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow commercial relationships to affect our editorial independence.