UK appears to be the only G-7 nation where output declined in the July-September period
According to WSJ, the British economy contracted in July-September, marking the beginning of what policymakers expect to be a long-lasting recession. Moreover, the downturn is likely to affect most of Europe in the coming months.
The news appeared in the background of high energy prices and rising interest rates. UK’s gross domestic product was 0.7% lower on an annualized basis in the third quarter compared with the three months through June. That was the first decline in output since the first quarter of 2021 when the economy was still affected by lockdowns. In addition, Britain is the only major industrialized economy to have failed to return to pre-pandemic output so far.
Experts believe the UK is very likely to enter into recession before any other G7 counterpart. A recession is officially declared when a country faces two consecutive quarters of declining output.
Although all the world economies struggle with the aftermath of the Russian invasion of Ukraine, the UK economy has also dealt with unique challenges, including a workforce shortage, the longer-term impact of the country’s departure from the EU, as well as political turmoil.
Meanwhile, other rich nations of the world reported economic slowdowns but not a sustained contraction in Q3 2022. Moreover, Japan which is due to report its third-quarter GDP figures on Monday is even expecting slight growth.