Revised figures show that the British economy performed worse in the last six months than previously expected.
ADVERTISEMENTRevised data shows that the British economy shrank 0.1% on quarter in the three months to September 2023, following stagnation in the previous quarter, according to the Office for National Statistics.
Previously it was estimated that British GDP plateaued following minor growth in the second quarter.
The new figures suggest that the British economy risks heading into a technical recession (when the economy contracts for two consecutive quarters).
In a yearly comparison, UK GDP expanded 0.3% year-on-year in the third quarter of 2023, half the initial estimate of 0.6%, and matching Q2 growth which was also revised down to 0.3% from 0.6%.
In the third quarter, compared to the previous quarter, household spending declined more than expected by -0.5% while business investment also fell by -3.2%. The output of the economy was also dragged down by a slight dipping of the services sector, mainly due to a decline in telecommunications and computer programming.
On the other hand, the production and construction did better than previously expected.
Both exports and imports contracted quarter on quarter as well as in a yearly comparison.
Consumer spending, one of the key drivers of the British economy, has risen mildly in a yearly comparison, along with real households' disposable income.
Separate data also published on Friday showed that retail sales in November jumped by much more than expected, increasing by 1.3% from October, boosted by discount sales, according to Reuters.
How big a challenge is the UK economy facing?
Britain's economy is now estimated to be 1.4% bigger than before the COVID-19 pandemic, the second weakest recovery in the Group of Seven after Germany, according to Reuters.
Analysts don't agree whether the latest data means recession is definitely on the cards.
Ashley Webb, at Capital Economics, said the data suggested a mild recession might have begun with the economy showing signs of struggling again in the fourth quarter and because much of the hit from higher borrowing costs was yet to filter through.
Samuel Tombs, at Pantheon Macroeconomics, predicted GDP would hold steady between October and December and households faced a better 2024 when inflation is due to slow further, the tax burden will be lightened and welfare benefits go up.
