According to experts, what Whether the economy holds up will depend on people’s willingness to spend more of their income and withdraw excess savings accumulated during the pandemic.
The UK economy contracted in the third quarter and for the first time since the final closure of the pandemic in Europe, which alerts an eventual recession.
This, as the cost of living crisis reduced spending and the additional bank holiday for the Queen’s funeral closed businesses.
Notably, gross domestic product fell 0.2% , marking the beginning of what is expected to be a prolonged recession.
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The drop was smaller than economists expected but the first since the first quarter of 2021, as found by the average British Fortune.
This means that Britain is the only economy in the Group of “Seven”that has not yet fully recovered from the pandemic.
In September alone, GDP contracted 0.6%, reflecting an additional holiday for the funeral of Queen Elizabeth II and the previous period of national mourning.
It was the second consecutive month of contraction.
The chancellor Jeremy Hunt, who said: “I have no illusions that there is a difficult road ahead”.
“It is one that will require extremely difficult decisions to restore the confidence and economic stability. But to achieve long-term sustainable growth, we need to control inflation, balance the books and reduce debt. There is no other way”, he added.
Notably, both consumer spending and business investment fell during the quarter.
Despite this, there was support from a improvement in trade, said the Office for National Statistics.