UK economy shrinks by 0.3 per cent during Q3 of 2022

The UK economy shrank by more than first estimated during the third quarter of 2022, new figures reveal today.

Gross domestic product (GDP), the value of all the goods and services produced in the country, fell by a revised 0.3 per cent against the 0.2 per cent decline initially estimated from July to September, according to the Office for National Statistics.

The ONS said the manufacturing and construction sectors performed worse than originally thought.

Manufacturing activity contracted 2.8 per cent, worse than the 2.3 per cent contraction previously announced, while construction activity actually shrank 0.2 per cent, less than the 0.6 per cent growth that had been recorded in November.

The level of real GDP in Q3 2022 is now estimated to be 0.8 per cent below where it was pre-pandemic.

Household income fell by 0.5 per cent this quarter, while business investment is estimated to have dropped by 2.5 per cent.

Raj Kandola (pictured), head of policy and strategic relationships at Greater Birmingham Chambers of Commerce, said: “This morning 's downward revision for the Q3 GDP figures adds to the expectation that Britain is facing the prospect of a recession as we head into next year.

“This quarter saw a jump in household savings, which in part was driven by the fallout from the Mini Budget as the value of gilt yields went up, however, it was no surprise to see a squeeze on household incomes as the cost-of-living crisis continues to knock consumer spending.

“Given the broader economic context, it was no surprise to see a drop in the levels of business investment - data from our latest Quarterly Business Report revealed that investment in training and capex had fallen amongst local businesses as they struggle to deal with spiralling cost pressures driven by soaring energy costs and record levels of inflation.

“However, the same report also revealed an underlying resilience as a notable number of firms expect their profits and turnover to increase over the next 12 months.

“In light of this, it 's essential we see proactive action from Government to alleviate the cost pressures firms are facing which will help free up more cash for businesses to invest in their people and products - clarity on long term energy support is going to be essential. ”

Read the Chamber's Q3 Quarterly Business Report.