The UK is in the first stages of a recession and the situation is worse than originally thought, according to new figures released today.
GDP figures from the Office for National Statistics (ONS) found that national income dropped by 0.5% in the three months until the end of September, the first time this has happened in 16 years.
Analysts were shocked that the economy shrank by such an amount, having predicted that the fall would be about 0.2% in the quarter.
Investec’s Philip Shaw said: “News since the end of September has hardly been encouraging and the UK may well experience a recession that is significantly deeper than we had expected before.”
A number of factors contributed to the drop, the ONS said, such as weaker service industries and poorer production output.
Howard Archer of Global Insight added: “The depth of the decline means that we are there [in recession] to all intents and purposes. Indeed, there can be no doubt that further marked GDP contraction will occur in the fourth quarter.”
The ONS has also said this week that food sales have fallen on its barometer for the first time since 1986.
