Recession fears loom as UK GDP falls by 0.2 percent

Britain’s GDP fell by 0.2 percent from July to September of this year, according to estimates released Friday by the Office for National Statistics.

If the economy contracts for a second successive quarter over the final three months of this year, the U.K. will have formally entered a recession. Last week, the Bank of England warned the U.K. was in danger of heading into the longest recession in a century, lasting until the middle of 2024.

“I am under no illusion that there is a tough road ahead — one which will require extremely difficult decisions to restore confidence and economic stability,” U.K. Chancellor Jeremy Hunt said in a statement Friday morning. “To achieve long-term, sustainable growth, we need to grip inflation, balance the books and get debt falling. There is no other way.”

Hunt is due to set out his fiscal plans in a budget statement on November 17, with tax rises and spending cuts widely anticipated.

The ONS said the monthly estimates show that GDP fell by 0.6 percent in September, but stressed that month’s figures were negatively affected by an additional bank holiday held for the state funeral of Queen Elizabeth II.

Real household expenditure for the third quarter fell by 0.5 percent, according to the ONS estimates.

Rachel Reeves, the shadow chancellor from the opposition Labour Party, said: “Britain’s unique exposure to economic shocks has been down to a Conservative-led decade of weak growth, low productivity and underinvestment and widening inequality.”