By John Ikani
Britain’s GDP fell by 0.2 percent from July to September of this year, with the British economy shrinking by 0.6% in September alone, according to estimates released Friday by the Office for National Statistics.
Friday’s statistics are the first drop in UK GDP since the country closed businesses under a coronavirus lockdown in early 2021.
A country will not officially be in recession until the economy contracts for two quarters in a row, but the Bank of England forecasts Britain to be in one by the end of the year.
Last week, the Bank of England warned the UK was in danger of heading into the longest recession in a century, lasting until the middle of 2024.
“I am under no illusion that there is a tough road ahead — one which will require extremely difficult decisions to restore confidence and economic stability,” UK Chancellor Jeremy Hunt said in a statement Friday morning.
Hunt said there is a “tough road ahead” but claimed the economy has the “fundamental resilience” to recover.
Blaming international factors, Mr Hunt added: “We are not immune from the global challenge of high inflation and slow growth largely driven by Putin’s illegal war in Ukraine and his weaponisation of gas supplies.”
“To achieve long-term, sustainable growth, we need to grip inflation, balance the books and get debt falling. There is no other way.”
Hunt is due to set out his fiscal plans in a budget statement on November 17, with tax rises and spending cuts widely anticipated.
The Chancellor is said to be planning to cut planned growth in day-to-day public spending from 3.7 per cent to as little as 1 per cent after 2025 – a squeeze that would mark a return to austerity.
Meanwhile, Britons are currently experiencing a severe cost-of-living crisis, with decades-high inflation and a jump in energy prices caused by the Russian war on Ukraine.
“The sharp rise in energy and other consumer prices has contributed to a squeeze on household finances, which is expected to have pushed the UK economy into a recession from the third quarter of this year,” Yael Selfin, chief economist at KPMG UK, told the AFP news agency on Friday.
