The United Kingdom’s (UK) gross domestic product (GDP) fell by an estimated 0.2 percent in the third quarter (Q3), the first quarterly contraction since the start of 2021, official statistics showed on Friday.
This follows a growth of 0.2 percent in the second quarter, and the level of GDP in the third quarter is now 0.4 percent below its pre-COVID-19 level in the fourth quarter of 2019, said the Office for National Statistics (ONS).
Monthly estimates showed the UK economy shrank by 0.6 percent in September, which was affected by the bank holiday for the funeral of Queen Elizabeth II, where some businesses closed or operated differently on this day.
“The quarterly fall was driven by manufacturing, which saw widespread declines across most industries. Services were flat overall, but consumer-facing industries fared badly, with a notable fall in retail,” said ONS director of economic statistics Darren Morgan.
A long recession has loomed for the UK. The Bank of England in early November predicted that even without more hikes in interest rates, the economy is still expected to be falling at the end of 2023. As the UK government is set to raise taxes and cut spending in mid-November, economic growth is expected to take a further blow.
“I am under no illusion that there is a tough road ahead — one which will require extremely difficult decisions to restore confidence and economic stability,” Chancellor of the Exchequer Jeremy Hunt tweeted on Friday in response to the GDP statistics.
“But to achieve long-term, sustainable growth, we need to grip inflation, balance the books and get debt falling. There is no other way,” he added.