Fears that the UK has fallen into recession have been heightened after official figures were revised to show that the economy shrank slightly in the July to September period.
The assessment that gross domestic product (GDP) fell by 0.1% in the third quarter – down from the previous estimate of no growth – will be a blow to Rishi Sunak, who has promised to get the economy growing as one of his fives pledges to voters before an expected general election next year.
The Office for National Statistics (ONS) said a poorer than previously assessed performance by small companies, film production, engineering and design and telecommunication and the IT sector accounted for much of the revision.
GDP for the second quarter was also revised down to zero growth, from a previous estimate of 0.2% expansion.
The Bank of England’s 14 interest rate rises over the last two years, taking the cost of borrowing from 0.1% to 5.25%, are also expected to have taken a bigger toll on the corporate sector and household spending than previously thought.
An economy is considered to be in a technical recession after two consecutive quarters of contraction in GDP, and a further contraction in the fourth quarter would push the UK into that category.
Darren Morgan, an ONS director of economic statistics, said: “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. The broader picture, though, remains one of an economy that has been little changed over the last year.”
Anxiety among households about the economy’s prospects was shown by a rise in the savings ratio, which increased to 10.1% in the third quarter, up from 9.5% in the second quarter as incomes grew by more than expenditure.
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