The economy of the United Kingdom (U.K.) contracted by 0.1% in this year’s third quarter as the country moves closer to entering a recession.
U.K. Gross Domestic Product (GDP) declined by 0.1% between July and September of this year, according to a downward revision by the Office for National Statistics.
The Q3 decline follows zero growth in the previous second quarter, the new data shows. A recession is technically defined as two consecutive quarters of negative growth.
British Finance Minister Jeremy Hunt responded to the new economic data by saying that it is too early to determine if the U.K. is in a recession or not.
However, analysts said that the newly revised figures show that growth is slowing across the U.K. as elevated interest rates take hold.
Analysts add that a recession could put pressure on the Bank of England to cut interest rates sooner than planned.
Other data recently released showed that inflation in the U.K. fell to 3.9% in November, lower than economists had expected and raising speculation that the central bank could cut interest rates in early 2024.
However, Bank of England Governor Andrew Bailey has insisted publicly that rates may need to remain “higher for longer” after holding them steady at 5.25% at the last policy meeting of 2023.
