UK economy contracts 0.2% in Q3

The first signs of the UK entering a recession reared its head in the last quarter as the economy contracted by 0.2% between July and September, according to the latest figures from the Office for National Statistics (ONS).

Monthly estimates published today (11 November 2022) found that GDP fell by 0.6% in September 2022 which was affected by the bank holiday for the State Funeral of Her Majesty Queen Elizabeth II, where some businesses closed or operated differently on this day.

In output terms, there was a slowing on the quarter for the services, production and construction industries; the services sector slowed to flat output on the quarter driven by a fall in consumer-facing services, while the production sector fell by 1.5% in Quarter 3 2022, including falls in all 13 sub-sectors of the manufacturing sector.

In expenditure terms, real household expenditure fell by 0.5% in Quarter 3 2022, however, there were also large positive movements in international trade flows in the third quarter.

Compared with the same quarter a year ago, the implied GDP deflator rose by 5.8%, primarily reflecting higher cost pressures faced by households.

Darren Morgan, ONS director of Economic Statistics, said: “With September showing a notable fall partly due to the effects of the additional bank holiday for the Queen’s funeral, overall the economy shrank slightly in the third quarter.

“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.”