UK economy shrinks, suggesting recession may be underway

Britain’s economy shrank between July and September and growth was flat in the previous three months, according to updated official figures that suggested the economy might now be in a recession.

UK gross domestic product (GDP) contracted by 0.1 per cent in the third quarter, the Office for National Statistics (ONS) said on Friday.

It had previously estimated that the economy showed no change compared with the previous three months and economists polled by Reuters had mostly expected another unchanged reading.

The ONS also said economic output in the second quarter was now estimated to have shown no growth, a downwards revision from a previous estimate of 0.2 per cent growth.

However, separate data showed retail sales in November jumped by much more than expected, increasing by 1.3 per cent from October.

Sterling rose against the dollar and the euro after the data releases.

UK chancellor Jeremy Hunt, whose Conservative Party is lagging in opinion polls in advance of an expected election next year, said the outlook for the economy was not as bad as the updated official figures suggested.

“The medium-term outlook for the UK economy is far more optimistic than these numbers suggest,” Mr Hunt said in a statement. – Reuters

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