UK's economy shrinks more than previously thought in third quarter: Data

The United Kingdom's (UK) economy has contracted more than previously thought in the third quarter of this year, putting the country at the bottom of the G7 in terms of quarterly growth.

According to data presented by the Office for National Statistics (ONS) on Thursday, the Gross Domestic Product (GDP)fell by 0.3% in the third quarter against the estimated 0.2% decline. Growth figures for the first half of this year were also revised down, with figures showing the country mustered growth of just 0.6% in the first quarter and 0.1% in the second quarter. The office also reported that the Gross Domestic Product (GDP) is now estimated to be 0.8% below pre-pandemic levels.

Darren Morgan, director of economic statistics at the ONS, said the office's revised figures showed that the UK's economy performed slightly less well over the last year than previously estimated, with manufacturing and electricity generation notably weaker, according to a report by the Associated Press.

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Experts have predicted that the economy will shrink further in the final quarter, which would see the country falling into recession. British consumers are already seeing the effects, with household spending dropping by 1.1% after inflation over the third quarter- the first fall since January-March last year, the report added.

Darren Morgan, meanwhile, said that the country's household incomes continued to fall in real terms, albeit at a slower rate than in the previous two quarters.

“Looking ahead, the UKlikely will continue to underperform; we expect Britain to suffer the deepest recession among major advanced economies in 2023,” the top ONS official added.

Last week, the Bank of England (BoE) raised its key interest rate from 3% to 3.5%. The BoE's Monetary Policy Committee (MPC) said that further increases in the bank rate might be required to tackle persistent domestic inflation pressures from prices and wages. The central bank said on December 15 that it expected the UK's GDP to decline by 0.1% in 2022 Q4, 0.2 percentage points stronger than expected in last month's report.

"Household consumption remains weak and most housing market indicators have continued to soften. Surveys of investment intentions have also weakened further," the BoE said in a statement.