UK economy shrinks by more than initial estimates in Q3. See details

The UK economy experienced a contraction by more than initially estimated in the third quarter of this year. According to the Office for National Statistics, Gross Domestic Product (GDP), the value of all the goods and services produced in the country, fell by a 0.3% against the 0.2% decline that initially estimated from July to September. If this trend continues into the fourth quarter of this year, it would result in recession, which basically means two consecutive quarters of negative growth.

There could be many reasons for this negative growth. The manufacturing and construction sectors performed worse than originally thought. Construction activity shrank 0.2% rather than grew 0.6%, which had been recorded in November while manufacturing activity contracted 2.8%, worse than the 2.3% contraction previously announced. Electricity generation too was described as "notably weaker" by the director of economic statistics at the Office for National Statistics.




While the household spending fell for the first time since the spring lockdown of 2021, household incomes on the other hand experienced a continuous fall, even though the rate of decline slowed as compared to the first two quarters of 2022. As household spending fell by a revised 1.1% in the quarter as declines in tourism, transport, household goods and services, and food and drink spending were seen, the households' disposable income fell by 0.5% in the quarter, which is the fourth consecutive drop.

Real consumption expenditure, which includes restaurants, hotels, recreation and culture, was seen slowing down over the past year. It has resulted in reduction in disposable income and cost of living crisis, fuelled by high inflation.

According to forecasts from the Organisation for Economic Cooperation and Development (OECD), this is expected to be the worst performance if compared to any of the other G7 countries that form the group of world’s largest industrialised democracies.

FAQs:

1. Which countries are a part of the G7 forum?
   The G7 forum includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, as well as the European Union.
2. What is the current GDP of the United Kingdom?
   On December 22, 2022, GDP of the UK was £ 856,556 M, according to ONS.