Recession drags on in third quarter
Published 22/12/2009 | 10:22
The economy shrank by a worse-than-expected 0.2% between July and September as the UK's record recession dragged on, official figures show.
Experts had predicted a 0.1% third-quarter decline but a bigger-than-expected fall in output for the UK's powerhouse services sector dragged the economy lower, the Office for National Statistics (ONS) said.
The gloomy figures confirm a sixth successive quarter of recession, with the UK's loss of output since the slump began last year now standing at 6% - on a par with the slump at the beginning of the 1980s.
The 0.2% fall between July and September represents a shallower decline than the 0.3% previously estimated by the ONS.
But economists had expected a stronger figure due to recent data showing strong construction growth.
The ONS said service sector output fell by 0.2% in the period, mainly due to continued weakness among financial services firms such as banks and insurers.
Output from production industries fell by 0.9% on the quarter - with a 0.2% decline for manufacturers - although there were some bright spots such as a 0.7% output rise from hotels and catering.
Previous quarters of the recession were also revised downwards by the ONS.
The economy shrank by a bigger than previously thought 0.7% between April and June and by 0.9% in the third quarter of 2008, the ONS said.
Meanwhile the household savings ratio - the share of income put aside by families - also rose to an 11-year high of 8.6% during the third quarter of the year as households bunkered down to ride out the recession. The ratio stood at 7.6% in the second quarter.