UK recession risk rises after economy shrinks more than expected

The revised figure means in the third quarter of 2023 the UK's economy shrunk, increasing the risk of a recession, ITV News Political Correspondent Dan Rivers reports

The UK economy shrank more than expected in the third quarter of 2023, raising the risk of the country falling into a recession, according to official figures.

Gross domestic product (GDP) fell by a revised 0.1% against the zero growth initially estimated, the Office for National Statistics (ONS) said.

It also flatlined during the second quarter of the year, after prior estimates showed 0.2% growth, painting a bleaker picture for the economy.

Industries including film production, engineering and design and telecommunications showed a weaker performance during the third quarter than the ONS initially thought.

The revised figures come after the ONS said the economy shrank by 0.3% during October.

If GDP falls between October and December then it puts the economy at risk of falling into a recession, which can be defined as two consecutive quarters of negative growth.

In better economic news, retail sales were stronger than expected last month as shoppers snapped up Black Friday bargains and bought Christmas presents.

Households goods stores were among the strongest performers, with 3.5% growth, amid strong demand for furniture.

Meanwhile, food shops saw volumes increase by 0.8% for the month.

The Office for National Statistics (ONS) revealed that retail sales volumes increased by 1.3% in November.

It was ahead of the predictions of economists, who had forecast 0.4% growth for the month.

The ONS also revised its data for October upwards, reporting that there was zero growth in retail sales after previously estimating a fall of 0.3%.

Darren Morgan, director of economic statistics at the ONS, said: “The latest data from both our regular monthly business survey and VAT returns show the economy performed slightly less well in the last two quarters than our initial estimates.

“The broader picture, though, remains one of an economy that has been little changed over the last year.”

In response to the downgraded revisions for UK economic growth data, chancellor Jeremy Hunt said: "The medium-term outlook for the UK economy is far more optimistic than these numbers suggest.

"We've seen inflation fall again this week, and the OBR (Office for Budget Responsibility) expects the measures in the autumn statement, including the largest business tax cut in modern British history and tax cuts for 29 million working people, will deliver the largest boost to potential growth on record."

Labour said the prime minister has “failed to grow the economy".

Responding to the latest GDP figures, shadow chancellor Rachel Reeves said: “Rishi Sunak is a prime minister whose legacy is one of failure.

"He failed to beat Liz Truss, he failed to cut waiting lists, he failed to stop the boats and now he has failed to grow the economy.

“Thirteen years of economic failure under the Conservatives have left working people worse off with higher bills, higher mortgages and higher prices in the shops.

“It’s time for change. The Labour Party, led by Keir Starmer, has a long-term plan to grow the economy and make working people better off.”

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