The UK economy contracted by 0.1% between July and September, according to revised official figures from the Office for National Statistics (ONS), worse than the previous estimate of no growth. The downward revision raises concerns that the country may be entering a recession.
The ONS also revised down second-quarter growth to zero, from an initial 0.2%. With October data already showing a contraction, the UK may have experienced two consecutive quarters of negative growth, meeting the technical definition of a recession.
Chancellor Jeremy Hunt sought to downplay the figures, highlighting that inflation has fallen and the medium-term outlook is 'far more optimistic'. He hinted that falling inflation and interest rates could allow for further tax cuts in the New Year.
ONS director Darren Morgan attributed the revisions to weaker performances in hospitality, IT, film production, engineering, and telecommunications. He noted that the broader picture shows an economy that has been 'little changed over the last year'.
Analysts at Capital Economics described the situation as 'the mildest of mild recessions' and predicted subdued growth throughout 2024. Hunt pointed to the sharp fall in inflation announced earlier this week as a positive sign.
