The ONS additionally reported that GDP is now estimated to be 0.8% below pre-pandemic levels, revised down from a prior estimate of 0.4% below.
“Our revised figures show the economy performed slightly less well over the last year than we previously estimated, with manufacturing and electricity generation notably weaker,” said Darren Morgan, director of economic statistics at the ONS.
The coming months look far from bright, as experts predict the economy will shrink further in the final quarter of 2022, which would see the U.K. fall into recession — when an economy shrinks for two quarters in a row — with forecasts that it will experience contractions of a similar size in both the first and second quarters of 2023. The effects are already hitting consumers hard, with household spending dropping by 1.1% after inflation over the third quarter — the first fall since January to March of 2021, when the U.K. was in lockdown.
“Household incomes continued to fall in real terms, albeit at a slower rate than in the previous two quarters,” Morgan said.
Compared with other advanced economies, the U.K. is faring especially poorly.
“The national accounts confirm that the U.K. was the only G-7 economy in which third-quarter GDP still was below its pre-COVID level,” said Samuel Tombs of Pantheon Macroeconomics.
“Looking ahead, the U.K. likely will continue to underperform; we expect Britain to suffer the deepest recession among major advanced economies in 2023.”
