Gloomy outlook as economy contracts in Q3

There was gloomy news on the UK economy this morning as new GDP figures showed the economy contracted by 0.1% in the third quarter of the year, from July to September.

What’s more, the small 0.2% growth that was previously announced in Q2 was downgraded to no growth at all, with the economy actually flatlining over that period.

The Q3 figures were affected by falls in output in the services sector, which were offset by an increase in construction and the production sectors.

The new set of figures show that the UK is perilously close to recession. If the figures for Q4 show a contraction in the economy, the the UK will be officially in recession.

Chancellor Jeremy Hunt said: “The medium-term outlook for the UK economy is far more optimistic than these numbers suggest.

“We’ve seen inflation fall again this week, and the OBR 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.”