British economy shrank more than previously thought this year, experts say - as recession looms
22 December 2022, 10:57 | Updated: 22 December 2022, 11:40
The British economy contracted more than economists previously thought in July, August and September, according to revised figures, as the UK continues to slide towards a recession.
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The Office for National Statistics (ONS) said on Thursday that the UK's GDP shrank by 0.3% in the third quarter of the year, rather than 0.2% as original analysis of the figures showed.
That was down to lower output from manufacturers, builders and electricity generators, according to the ONS.
And economists said that GDP also grew by less than previous estimates in the first half of the year.
The ONS had originally said that the economy grew by 0.7% in the first quarter of 2022, and by 0.1% in the second quarter.
But growth was actually even more anaemic - 0.6% from January-March and 0.2% from April-June.
The latest figures also show the impact of rocketing inflation on families, with household disposable income down by 0.5% in the quarter.
Household spending dropped by 1.1% after inflation is taken into account - the first fall since January to March last year.
"Our revised figures show the economy performed slightly less well over the last year than we previously estimated," said Darren Morgan, director of economic statistics at the ONS.
Manufacturing and electricity generation was "notably weaker", he added.
Mr Morgan said: "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."
It comes as the UK is widely expected to slip into a recession - the economy shrinking for two straight quarters - by the end of the year.
Economists think GDP will contract by 0.3% in the fourth quarter of 2022, with similar shrinkages to follow in both the first and second quarters of 2023.
Mel Stride responds to reports that the UK economy will suffer the most in the G7 next year
Although the government has said repeatedly that other countries are also facing the same problems as the UK - like the fallout from Covid-19 and the war in Ukraine, some economists expects the UK's recession to be the worst among any developed countries.
Tory MP Angela Richardson says the predictions are that the UK will be in a recession for two years
Samuel Tombs of Pantheon Macroeconomics said: "The national accounts confirm that the UK was the only G7 economy in which third quarter GDP still was below its pre-Covid level."
He added: "Looking ahead, the UK likely will continue to underperform; we expect Britain to suffer the deepest recession among major advanced economies in 2023, due to the severity of the headwinds from both monetary and fiscal policy.
"We expect a 2% peak-to-trough fall in GDP, leading a year-over-year decline of 1.5% in 2023."
.Chancellor Jeremy Hunt said: “High inflation driven by Putin’s invasion of Ukraine is slowing economic growth across the world. No country is immune, least of all Britain.
“Getting prices down so people’s wages go further is my top priority, which is why we are holding down energy bills this winter and providing extra cost of living payments for the most vulnerable.
“To get the British economy back on track, we have a plan that will help to more than halve inflation next year, while laying the foundations for long-term growth through record investment in infrastructure and new industries.”
