The UK economy has contracted by 0.1 per cent, revised data released by the Office of National Statistics (ONS) has shown, performing worse than previously predicted.
Economists thought the economy had remained stagnant last quarter but received a shock this morning when revised ONS data showed Britain is actually on the path to recession.
Experts had been expecting a growth in the British economy of around 0.2 per cent.
Bank of EnglandPAAccording to the ONS data which revised all previous quarters of growth in 2023, UK GDP was found to have shown no growth in Q2 (April to June) after being revised down from a previously reported increase of 0.2 per cent.
However, the ONS said growth in Q1 and all quarters of 2022 were unrevised.
The latest revision of the data suggests a recession in the UK is possible - marked by two back-to-back quarters showing a shrinking economy.
Economists will know whether the UK will enter a recession when data for Q4 (October to December data) is released next year.
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Governor of the Bank of England Andrew Bailey
PAShould the ONS data show a contraction, the country will officially be in a recession.
“The medium-term outlook for the UK economy is far more optimistic than these numbers suggest,” Chancellor Jeremy Hunt said while responding to the figures.
The ONS data continued to add that the household saving ratio was estimated to be 10.1 per cent in the latest quarter, up from 9.5 per cent in Quarter 2, 2023 because of an increase in income outweighing a slight increase in expenditure.
Real households' disposable income (RHDI) is estimated to have grown by 0.4 per cent following growth of 2.3 per cent in Quarter 2 2023.
ONS data shows UK economy shrank in Q3
ONS
However, it adds there was a 0.2 per cent fall in the services sector in the latest quarter, which offset a 0.4 per cent increase in construction output and a 0.1 per cent increase in the production sector.
ONS director of economic statistics, Darren Morgan, warned regular monthly business survey and VAT returns showed less spending across the UK.
According to Morgan, film production, engineering and design, and telecommunication all faired “a little worse” than expected.