Office for National Statistics reviews show no economic growth in April-June and a 0.1% contraction in July-September.
by Sarah Taffey Maguire, business reporter @taaffems
Friday 22 December 2023 at 08:13, United Kingdom
New official figures show that the British economy has performed worse than previously thought and below economists’ expectations, meaning the country has taken the first step towards recession.
There is a downward revision to gross domestic product (GDP), a key measure of economic growth, the Office for National Statistics (ONS) said on Friday morning.
Instead of remaining stagnant, as initially thought, the economy contracted by 0.1% in the three months from July to September.
Economists had expected growth of 0.2%.
The country is technically in recession after two three-month periods of economic contraction.
Read more
Rishi Sunak is set to struggle to deliver on a key pledge as public debt grows
UK car makers welcome the extension of duty-free exports to the EU for electric vehicles
If the final data for the fourth quarter of 2023, from October to December – which will be released next year – shows a contraction, the country will officially be in recession.
Another amendment was made to the second quarter of the current year, from April to June. Instead of growth of 0.2%, as previously announced, the Office for National Statistics said there was virtually no growth.
Darren Morgan, director of economic statistics at the Office for National Statistics, said changes had been made to the statistics, with the regular monthly business survey and VAT returns showing less spending.
Morgan said the sectors behind the adjustments were weaker performers than small businesses, especially hospitality and IT.
In the latest quarter, film production, engineering, design and telecommunications performed “slightly worse” than expected.
He added that VAT data takes time to receive and process.
The British economy suffered a sudden drop in output in October. Economists had expected a flat performance, after growth of 0.2% in September. However, the 0.3% contraction surprised many.
In the most recent three-month period, there was a 0.2% decline in the large services sector, offsetting a 0.4% expansion in construction production and a 0.1% increase in the production sector.
Responding to the figures, Chancellor Jeremy Hunt said: “The medium-term outlook for the UK economy is much more optimistic than these figures suggest.”
We have seen Fall of inflation Again this week, the OBR [Office for Budget Responsibility] It expects that the measures in the Autumn Statement, including the biggest business tax cut in Britain’s modern history and tax cuts for 29 million workers, will provide the biggest boost to potential growth ever.