UK close to recession after economy falls by 0.1% in third quarter of 2023, ONS figures reveal

The UK is on the road to recession after new data shows GDP fell by 0.1% in the third quarter of 2023. The downward trend is due to a fall in the services sector, the Office for National Statistics (ONS) confirmed on Friday morning.

"In output terms, there was a 0.2% fall in the services sector in the latest quarter, which offset a 0.4% increase in construction output and a 0.1% increase in the production sector," the ONS said.

Initial estimates from economists had predicted GDP would either flatline or grow by 0.2% in the third quarter. Economists won't know if the UK is officially in recession until final data for the fourth quarter of 2023 is released next year.

A country is in recession when GDP falls for two quarters in a row.

Industries including film production, engineering and design and telecommunications also contributed to the lack of growth, performing weaker during the third quarter than the ONS initially thought.

Chancellor Jeremy Hunt has responded to today's figures, claiming the medium-term outlook for the UK economy is "more optimistic” than GDP data shows. Hunt said: “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."

In a separate blow for the government, new figures suggest GDP is estimated to have shown no growth in the second quarter of the year, despite the previous estimate of +0.2% growth.

Responding to the latest GDP figures, Labour said the Prime Minister has “failed to grow the economy”. 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."

She added: “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.”