UK gross domestic product (GDP) fell by 0.2% in the third quarter of the year and by 0.6% in September alone.
This is what the latest figures from the Office for National Statistics (ONS) reveal.
Compared with Q3 2021, the implied GDP deflator rose by 5.8%. It reflects the higher cost pressures households are facing.
This fall in GDP comes after the Bank of England (BoE) warned of a two-year recession through to 2024.
The ONS estimates that the bank holiday for the State Funeral of Her Majesty Queen Elizabeth II had an impact on the UK economy.
This is because some businesses closed or operated differently on this day.
CBI lead economist Alpesh Paleja says: “The latest GDP data likely marks the start of a downturn for the UK economy, which could last for most of the coming year.
“Even accounting for an extra bank holiday in September, it’s clear that underlying activity has weakened – as shown by our recent business surveys.”
Paleja warns that this weak growth outlook and high inflation level will have an impact of the upcoming Autumn Statement.
He adds: “The Autumn Statement must learn the lessons of the 2010s: fiscal sustainability and lifting trend growth are both immediate priorities.
“Alongside reassuring markets and protecting the most vulnerable, the government should safeguard capital spending and investment allowances to drive private sector growth.”
The services, production and construction industries all experienced a slowing in output terms in Q3.
While services output was flat, production output fell by 1.5% and construction output rose by 0.6%.
Private consumption has also been affected, with real household expenditure falling by 0.5% in Q3 2022.
EToro global markets strategist Ben Laidler said: “The economy will keep suffering from the harsh policy medicine needed to bring 10% inflation down.
“The government’s 17 November Autumn budget will announce a £50bn austerity package of tax rises and spending cuts, whilst the 15 December BoE meeting is set for a ninth straight interest rate increase.”
