The UK economy may be in recession, with Chancellor of the Exchequer Jeremy Hunt taking the rare step of suggesting the Bank of England may cut interest rates after data showed a contraction between July and September.
Gross domestic product (GDP) shrank 0.1% in the third quarter, the National Bureau of Statistics said.
The agency had previously estimated that the economy had stagnated in the previous three months, and economists in a Reuters poll had expected another zero reading.
Likewise, the estimate for second-quarter gross domestic product is now stable, a cut from the previous forecast of 0.2% growth.
However, there were some more optimistic signs about the economy in separate data released on Friday, which showed that retail sales rose more than expected in November, up 1.3% from October. , driven by discount sales.
The increase in retail sales volumes reflected heavy discounts during Black Friday promotions. Sales fell in the three months to November and were below their pre-pandemic levels, the statistics agency said.
Finance Minister Hunt – whose Conservative Party is lagging far behind opposition Labor in opinion polls and an election due next year – took the unusual step of commenting on the central bank’s interest rate decisions.
“If we continue on the course we are on, the Bank of England may decide to start cutting interest rates if we can get inflation down,” Hunt said in an interview with Financial. The Times published Thursday night.
The Bank of England has insisted interest rates could fall to 3.75% by the end of next year, although the recent slowdown in UK inflation has helped fuel betting on financial markets. , compared to its current 15-year high of 5.25%.
After Friday’s numbers, Hunt issued a statement saying the outlook for the economy is not as dire as the numbers suggest.
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