UK economy shrank more than previously thought

The UK economy shrank by more than first thought in the three months to September, revised figures show.

Output fell by 0.3%, compared to a previous estimate of 0.2%, as business investment performed worse than first thought, the Office for National Statistics said.

Its growth figures for the first half of 2022 have also been revised down.

The UK is forecast to fall into recession in the final three months of the year as soaring prices hit growth.

A country is in recession when its economy shrinks for two three-month periods - or quarters -in a row. Typically during a recession, companies make less money, pay falls and unemployment rises, leaving the government with less money in tax to use on public services.

Darren Morgan, director of economic statistics at the ONS, said: "Our revised figures show the economy performed slightly less well over the last year than we previously estimated, with manufacturing and electricity generation notably weaker.

"Household incomes continued to fall in real terms, albeit at a slower rate than in the previous two quarters, while - taking account of inflation - household spending fell for the first time since the final Covid-19 lockdown in the spring of 2021."

The ONS said that gross domestic product (GDP) - the measure of the size of the economy - was now estimated to be 0.8% below where it was before the pandemic struck, downwardly revised from the previous estimate of 0.4% below.

The economy has been hit as surging energy and food prices push inflation - the rate at which prices rises - to its highest level in 40 years.

Consumers are spending less and businesses are cutting investment, with the Bank of England warning the UK is at the start of a two-year downturn.

Along with its revision for July to September, the ONS said the economy also grew less than first estimated in the first half of the year - expanding by 0.6% in the first quarter and 0.1% in the second quarter.

The ONS has previously said growth stood at 0.7% and 0.2% in those quarters respectively.