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Voxpress:

Britain into recession, economy shrinks in third quarter

2022-11-11 09:04:42Kosova&Bota SHKRUAR NGA REDAKSIA VOX

Britain into recession, economy shrinks in third quarter

The UK economy shrank by 0.2% in the third quarter, early official figures show, marking the first step towards recession.

The Office for National Statistics (ONS) reported a fall in output for the month of September, leaving gross domestic product (GDP) in negative territory for the July-September period as a whole.

The official definition of a recession is two consecutive quarters of negative growth.

This will be achieved if the economy shrinks even in the current fourth quarter until the end of the year.

The prospect was seen as so dire by the Bank of England last week that it declared the UK was already in recession - outlining a scenario where the economy could shrink for eight consecutive quarters from the third quarter of 2022.

That would make the decline the longest since records began, although the depth of the decline would be moderate compared to that seen after the 2008 financial crisis.

The decline is being driven by the effects of the cost of living crisis.

Costs started to rise globally because demand was outstripping supply at the end of the COVID lockdowns.

Then, an economic bombshell would exacerbate the inflation problem after Russia invaded Ukraine in February – forcing up the costs of many essential commodities such as oil, gas, wheat and other foodstuffs.

The fallout, which includes the impact of Western sanctions on Moscow, forced up prices which were then passed down supply chains to the consumer.

Rising interest rates to tackle inflation, not just in the UK but in large parts of the world, have forced up borrowing costs to further squeeze spending power.

UK borrowers have endured extra pain after the Truss government's mini-budget caused a crisis of confidence in the UK's public finances in the financial markets, the damage from which is still being felt by mortgage customers in particular.

A weaker pound has also added to inflation because it makes the cost of imports more expensive.


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