Britain’s economy contracted in the three months to September, signalling the start of what is expected to be a long recession, highlighting the challenge for finance minister Jeremy Hunt as he prepares to raise taxes and reduce expenditure next week.
According to Friday’s official figures, economic production fell by 0.2% in the third quarter, less than the 0.5% drop predicted by economists in a Reuters survey.
However, it was the first drop in GDP since the beginning of 2021, when Britain was still subject to harsh coronavirus restrictions, as consumers and businesses struggled with a severe cost-of-living crisis.
Britain’s economy is now even smaller than it was before the epidemic – it is the only Group of Seven country that has yet to fully recover from the COVID collapse – it is smaller than it was three years ago on a calendar-quarter basis.
According to the Resolution Foundation, while the drop was smaller than investors expected, it put Britain on track for its fastest return to recession since the mid-1970s.
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