Recession likely as economy shrinks by 0.2 per cent

The UK economy shrank between July and September - increasing the likelihood of a recession, new figures reveal today.

The Office for National Statistics (ONS) said the economy contracted by 0.2 per cent during the three months as soaring prices hit businesses and households.

The ONS reported a dip in output for September, leaving gross domestic product (GDP) in negative territory for the third quarter as a whole.

Services fell by 0.8 per cent in September after growth of 0.1 per cent in August, with the largest contribution coming from a 3.2 per cent dip in information and communication activity, and a 2.0 per cent fall in wholesale and retail trade, and repair of motor vehicles and motorcycles.

Output in consumer-facing services fell by 1.7 per cent in September 2022, following a dip of 1.6 per cent in the previous month.

Production (0.2 per cent) and construction (0.4 per cent) both grew slightly in September.

Raj Kandola (pictured), head of policy at Greater Birmingham Chambers of Commerce, said: “Given the broader context, it was no surprise to see that economic output shrank over the previous quarter as the prospect of recession looms large.

“A drop in consumer spending driven by well documented global challenges such as rising inflation and spiralling energy costs continue to bite and dampen business confidence.

“Closer to home, early analysis from our latest Quarterly Business Report paints a similar picture with local businesses struggling to cope with sky-high price pressures and ingrained recruitment challenges.

“Today 's results simply underline the delicate balancing act the Chancellor will need to get right at the upcoming Autumn Statement - creating a platform for growth whilst maintaining a credible fiscal plan will give firms a much-needed confidence boost as they plan for what 's likely to be a difficult few months ahead.

"Despite the challenges, 40 per cent of businesses taking part in our Q3 Quarterly Business Report Survey were expecting their profitability to improve over the next 12 months. I would urge all readers to complete our QBR survey for Q4 and share your current experiences to help us present an accurate, up to date picture of local business community sentiment to stakeholders and decision makers."

The GBCC 's latest Quarterly Business Report survey is now live. Each response helps us paint a picture of the local economy and shapes economic policy at the regional and national level - find out more.

Book now to attend the Q3 Quarterly Business Report launch event, which focuses on Entrepreneurialism in Greater Birmingham.