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UK gross domestic product shrank by more than initially expected in the third quarter, according to the latest figures from the Office for National Statistics on Thursday.
The UK economy is now estimated to have contracted by 0.3% between July to September. This was downwardly revised from a previous estimate of a 0.2% decline.
Meanwhile, annual real UK GDP was revised upwards to 7.6% growth in 2020 to 2021, from a previous estimate of 7.5%.
‘Despite an upward revision to annual growth in 2021, downward revisions across the quarters of 2022 mean that real GDP is now estimated to be 0.8% below its pre-coronavirus pandemic level, revised from the previous estimate of being 0.4% below,’ ONS commented.
The estimates were adjusted due to the additional bank holiday in September for the state funeral of Queen Elizabeth II, which saw businesses close or reduce their operations.
Output in the third quarter is now estimated to have fallen by 0.3%, down from the first estimate of a 0.2% decline. This mainly reflects revisions to production and construction output estimates, ONS said.
Production output fell 2.5% in the third quarter, marking a contraction for five consecutive quarters. Construction output fell 0.2%, compared to a previous estimate of a 0.6% increase.
‘Construction output is now 3.3% above its pre-coronavirus level, having previously been estimated as being 3.8% above,’ ONS noted.
More positively, services output grew 0.1% in the third quarter. This was revised upwards from an estimate of flat output.
‘The latest quarterly services output increase was driven by growth in education (1.6%), professional, scientific and technical activities (0.6%) and public administration and defence (0.8%). There were offsetting falls driven by wholesale and retail trade (negative 0.9%), other services activities (negative 2.2%) and arts, entertainment and recreation (negative 1.7%),’ ONS said.
Separately, ONS released figures on the UK’s current account, which measures its balance of payments with the rest of the world.
In the third quarter, the underlying deficit, excluding precious metals, narrowed to £32.5 billion. The figure represents 5.2% of GDP in the period, and a change of £900 million from the previous quarter.
Including precious metals, the deficit was reduced to £19.4 billion, or 3.1% of GDP in the third quarter.
The total trade deficit, excluding precious metals, narrowed to £23.9 billion. This was as the goods deficit widened to £64.4 billion, offset by a higher services surplus, which rose to £40.5 billion.
The UK became a net lender during the period, with a net financial outflow of £2.9 billion, after an inflow of £21.9 billion in the second quarter.
By Elizabeth Winter, Alliance News senior markets reporter
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