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According to the most recent figures, Britain’s GDP unexpectedly contracted in the third quarter of the year, raising the prospect that the country is already in a recession.
According to a revised report released on Friday by the Office for National Statistics (ONS), third-quarter GDP fell 0.1% from the previous quarter after early estimates projected stable growth. The ONS also revised its GDP estimate for the second quarter, stating that there was no increase between April and June, as opposed to the previously projected 0.2% expansion.
The paper attributes the GDP decline to the faltering services sector, which accounts for four-fifths of UK activity. Services declined 0.2%, more than offsetting 0.4% growth in construction and 0.1% growth in output. According to economists, the third-quarter revision puts the UK at risk of a technical recession, which is traditionally characterised as two quarters or more of decreasing GDP. According to data, output fell 0.3% month on month in October, putting the economy on course to contract in the fourth quarter.
“The mildest of mild recessions may have begun in the third quarter,” Capital Economics analyst Ashley Webb told Bloomberg. “In the near term, the most recent activity surveys hint to sluggish GDP growth in the fourth quarter too,” he added.
Separate ONS statistics revealed that retail sales increased more than expected last month, buoyed by earlier-than-usual and broader Black Friday discounts. Meanwhile, many believe that updated GDP estimates will put more pressure on the Bank of England, prompting it to begin cutting rates again. Previously, the regulator predicted a 50% possibility of a recession in the second part of the year.