UK recession fears grow after economy shrinks

Chancellor Jeremy Hunt says outlook ' far more optimistic' than data suggests

Shoppers in London. Figures show UK retail sales in November jumped by more than expected. EPA
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The UK economy may already be in recession, updated figures suggest.

The country's gross domestic product shrank between July and September and was flat in the previous three months, the Office for National Statistics (ONS) said.

It fell by a revised 0.1 per cent against the zero growth initially estimated.

GDP also flatlined during the second quarter of the year, after estimates showed 0.2 per cent growth, painting a bleaker picture for the economy. A recession is defined as two quarters of negative growth.

Industries including film production, engineering and design and telecoms showed a weaker performance during the third quarter than the ONS initially thought.

But separate data showed retail sales in November jumped by much more than expected, increasing by 1.3 per cent from October.

The pound rose against the dollar and the euro after the data releases.

"The latest data from both our regular monthly business survey and VAT returns show the economy performed slightly less well in the last two quarters than our initial estimates," said Darren Morgan, director of economic statistics at the ONS.

“The broader picture, though, remains one of an economy that has been little changed over the last year.”

Chancellor Jeremy Hunt, whose Conservative Party is lagging in opinion polls ahead of an expected election next year, said the outlook for the economy was not as bad as the updated official figures suggested.

“The medium-term outlook for the UK economy is far more optimistic than these numbers suggest," Mr Hunt said in a statement.

Shadow chancellor Rachel Reeves criticised UK Prime Minister Rishi Sunak, saying he has “failed to grow the economy”.

Updated: December 22, 2023, 8:21 AM