UK economy contracts in third quarter

Economy

Britain's economy shrank in the third quarter, official data showed Friday, likely confirming it is already in a recession forecast to last some time.

Output shrank 0.2 percent in the July-September period, following a modest rise in the second quarter, the Office for National Statistics (ONS) said in a statement.

The Bank of England last week said the UK economy was set to also contract in the current final quarter, meaning the economy was in a recession.

The BoE also warned that Britain's economy could remain in recession until the middle of 2024.

Friday's data comes ahead of a fresh budget announcement from the government of new Prime Minister Rishi Sunak on Thursday as he looks to bring much needed political and economic stability to the UK.

As well as recession, Britain is facing a cost-of-living crisis with UK inflation at a four-decade high above 10 percent.

The country faces a winter of strike action as workers in the public and private sectors demand pay increases to match inflation and shortfalls to wage rises seen in recent years.

"The sharp rise in energy and other consumer prices has contributed to a squeeze on household finances, which is expected to have pushed the UK economy into a recession from the third quarter of this year," Yael Selfin, chief economist at KPMG UK, said following Friday's data.

The third-quarter contraction was in part owing to a national public holiday to mark the funeral of Queen Elizabeth II, which resulted in the closure of a large number of businesses, the ONS said.