British economy narrows more than expected in Q3, lags behind other G7 countries

By Aysu Bicer

LONDON (AA) - The UK economy contracted 0.3% in the third quarter, more than the estimated 0.2% decline, lagging behind other G7 countries, official data by the Office for National Statistics (ONS) showed on Wednesday.

Darren Morgan, director of economic statistics at the ONS, said: "Our revised figures show the economy performed slightly less well over the last year than we previously estimated", with manufacturing "notably weaker."

Household expenditure fell 1.1%, namely tourism, transport, household goods and services, and food and drinks.

Business investment went down 2.5% and inventories fell by £5.2 billion ($6.3 billion), mainly due to reductions for retail and manufacturing industries. On the other hand, government expenditure went up 0.5% and government investment surged 17.3%.

Commenting on the country's growth figure, James Smith, research director at Resolution Foundation, said on Twitter that "all this leaves the UK with the weakest growth in the G7 in Q3 and the only country where the level of GDP remains below its pre-pandemic level."

The figure is worse than Japan’s 0.2% fall in growth, whereas Canada and the US both post rises in GDP, by nearly 0.7%.

France (+0.2%), Germany (+0.4%) and Italy (+0.5%) all expanded in July-September too.
The Bank of England previously said the country was "expected to be in recession for a prolonged period and CPI (consumer) inflation would remain elevated at over 10% in the near term."

It predicted that the economy had entered a recession in the third quarter and that the downturn would last until mid-2024.

The bank also forecast GDP being down in 2023 and into the first half of 2024 "as high energy prices and materially tighter financial conditions weigh on spending."