UK economy shrinks more than previously thought

Revised figures paint bleaker picture of British crisis

The cost of living crisis continued to squeeze UK household budgets in the third quarter. PA

The UK economy contracted more than was previously estimated in the third quarter, the latest Office for National Statistics figures show.

The ONS said UK gross domestic product fell by 0.3 per cent between July and September, revised from an earlier estimated fall of 0.2 per cent.

The ONS has also revised its GDP estimates for the first half of the year. First-quarter growth was revised downwards from 0.7 per cent to 0.6 per cent, and the second quarter from 0.2 per cent to 0.1 per cent.

GDP is now estimated to be 0.8 per cent below where it was before the pandemic struck, down from the previous estimate of 0.4 per cent, the ONS said.

In terms of output, the services sector grew by 0.1 per cent in the third quarter, while the production sector fell by 2.5 per cent, including drops in all 13 manufacturing sub-sectors. Construction also fell, by 0.2 per cent.

“Our revised figures show the economy performed slightly less well over the last year than we previously estimated, with manufacturing and electricity generation notably weaker,” said Darren Morgan, director of economic statistics at the ONS.

Cost of living crisis

The cost of living crisis continued to squeeze household budgets in the third quarter. Disposable income fell by 0.5 per cent, its fourth consecutive quarterly drop.

“Household incomes continued to fall in real terms, albeit at a slower rate than in the previous two quarters, while, taking account of inflation, household spending fell for the first time since the final Covid-19 lockdown in the spring of 2021,” said Mr Morgan.