Belfast Telegraph

Saturday 27 December 2014

Recession drags on in third quarter

The economy shrank by a worse-than-expected 0.2% between July and September
The economy shrank by a worse-than-expected 0.2% between July and September

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.

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