UK Chancellor of Exchequer, Jeremy Hunt, on Friday warned of a ‘tough road ahead’ after it was revealed that the UK’s economy went into reverse in the third quarter, according to media report.
Hunt suggested he is engaged in a damage limitation exercise after a 0.2 per cent fall in GDP between July and September, saying his Autumn Statement aims to make any recession “quicker and shallower”, Daily Mail reported.
The figure was not as bad as feared, after the Bank of England and analysts pencilled in a 0.5 per cent contraction for UK plc in the three months under review.
However, it suggests that the UK might already be in a downturn, technically defined as two consecutive quarters of decline, Daily Mail reported.
Although the second quarter showed marginal growth of 0.2 per cent, the Bank of England warned last week that the country risks falling into the longest downturn in a century.
The Chancellor said the GDP numbers highlighted the need to get inflation under control and government debt falling.
But he could have been given some wriggle room as a worse outcome could have increased the pressure on the public finances.
The fall was driven mainly by manufacturing, with the powerhouse services sector largely flat.
September was particularly dire with a 0.6 per cent decline in the month – partly due to lower activity amid mourning for the Queen, Daily Mail reported.
That was partly offset by the single-month figure for August being revised up from a 0.1 per cent contraction to 0.1 per cent growth.