• Swindon & Wiltshire News
• Friday November 11 2022
• Author Name: Peter Davison

GDP fell 0.2 per cent in Q3 – heralding the beginning of a recession

GDP fell 0.2 per cent between July and September, according to official figures published today (Friday), heralding the start of what is expected to be a long recession.

The biggest fall was in the manufacturing sector, which shrank by 2.3 per cent, according to figures from the Office for National Statistics.

Services remained flat at 0.0 per cent, while construction was up by 0.6 per cent, but slowed.

The fall in September was 0.6 per cent, following a revised contraction of 0.1 per cent in August, said the ONS.

The ONS’ director for economic statistics, Darren Morgan, said: “With September showing a notable fall partly due to the effects of the additional bank holiday for the Queen’s funeral, overall the economy shrank slightly in the third quarter.

“The quarterly fall was driven by manufacturing, which saw widespread declines across most industries. Services were flat overall, but consumer-facing industries fared badly, with a notable fall in retail.”

Leading business organisations reacted by calling for the government to take action.

David Bharier, head of research at the British Chamber of Commerce, said: “Our research clearly shows that business confidence has fallen significantly in recent months.

“Inflation, driven by energy costs and supply chain disruption, is by far and away the top factor of concern, wiping out margins for many SMEs.

“With the Bank of England now forecasting a two-year recession, monetary and fiscal policy need to align to prevent stagflation.

“The Chancellor’s Autumn Statement must reassure the financial markets after the recent self-inflicted turmoil.

“But businesses need to see a long-term economic plan that invests in people, skills, and infrastructure and radically improves our trading relationships with key markets, not least across Europe.”

Martin McTague, national chair at the Federation of Small Businesses, said: “Coming out of pandemic-era lockdowns, this was supposed to be the period when the economic recovery would start to motor, with the small business community leading the way.

“Following the global financial crisis, nine out of ten people moving back into employment did so through working for a small business, or setting themselves up as one by starting their self-employed career.

“But with a contraction of the small business community of nearly half a million small firms over 2020 and 2021, the strong indications that we are in recession could lead to many further losses, with established outfits sadly having to shut up shop, and entrepreneurs’ good ideas staying on the drawing board.

“The Government next week at its Autumn Statement must not just balance the books – it has to have a clear set of measures that will help boost prosperity, growth and jobs.

“Without it, in a year’s time we will be back here again, with an even smaller economy, looking once again for spending cuts and tax rises to balance a spreadsheet total.”

And Alpesh Paleja, lead economist at the CBI, said: “The latest GDP data likely marks the start of a downturn for the UK economy, which could last for most of the coming year.

“Even accounting for an extra bank holiday in September, it’s clear that underlying activity has weakened – as shown by our recent business surveys.

“A weaker growth outlook and persistently high inflation will make for some difficult decisions on economic policy.

“The Autumn Statement must learn the lessons of the 2010s: fiscal sustainability and lifting trend growth are both immediate priorities.

“Alongside reassuring markets and protecting the most vulnerable, the government should safeguard capital spending and investment allowances to drive private sector growth.”