The British economy contracted more than expected in the third quarter by 0.3 percent. This is probably also the beginning of a prolonged recession.
Earlier, the British statistics office assumed a contraction of 0.2 percent for the past three-month period. The economy in Great Britain was mainly depressed by a fall in production of 2.5 percent. The country is primarily struggling with a crisis due to the increased costs. Last year, the economy was still burdened by the strict corona measures.
The Bank of England warned last month that the British economy would collapse. According to policymakers, this period of contraction could last up to two years if interest rates continue to rise sharply. However, according to estimates, even without rate hikes, the economy would contract until the end of 2023.
The contraction of the economy makes it difficult for British Chancellor of the Exchequer Jeremy Hunt to implement his policies. Hunt wants to raise taxes and cut spending, among other things.
UK household income has now fallen for the fourth quarter. According to economists, the living standard of Britons is well on its way to losing to its lowest level in decades. Adjusted for inflation, disposable income per person fell by 0.5 percent in the third quarter.
“Britain is almost certainly already in a recession that may be deeper than the early 1990s. Moreover, the depressing effect on household incomes will increase as interest rates rise,” says an economist at the British accountancy firm RSM UK.
Thursday’s figures underline the purchasing power crisis, which has sparked the worst industrial unrest in decades. British workers, from machinists to nurses, have been on strike for months to demand wage increases in line with inflation.
