London Daily

Focus on the big picture.
Wednesday, Sep 17, 2025

The UK has one foot in a recession but it's worth being wary of forecasts during uncertain times

The UK has one foot in a recession but it's worth being wary of forecasts during uncertain times

GPD has shrunk days before the chancellor is expected to address an "eyewatering" gap in the public finances, suggesting there could be worse to come. However, the fact it is unclear what will happen in Ukraine is just one reason why people should hold their judgement.

The UK now officially has one foot in a recession.

That might on the face of it sound like a statement of the obvious. After all, for many households up and down the country it has felt pretty tough for quite some time.

That the Office for National Statistics (ONS) is now saying that gross domestic product (GDP) shrank by 0.2% in the third quarter of the year might feel neither here nor there. And the definition of a recession is also frankly somewhat arbitrary: we will only "formally" be in recession according to that definition if GDP also shrinks in the final three months of the year.

Even so, these numbers are worth paying attention to for a few reasons. The first is that GDP is the most comprehensive measure of how we're all doing. It has plenty of flaws, but as economic numbers go, they don't get much more important. For GDP shows how much money and activity we're generating across the country. And when it falls it means we're all a bit worse off.

And the concern is that pretty much every major forecaster thinks this is just the beginning of it. The Bank of England's forecasts assume a further seven quarters of contraction - though it's worth saying there are some very big provisos around this number. And then when you bear in mind that this all comes before the widely expected cuts and tax rises the chancellor is expected to introduce next week to address what he today called an "eyewatering" gap in the public finances, it's clear there could be worse to come.

That being said, here are a couple of reasons to hold your judgement. The first is that we really have no conception of what is going to happen in Ukraine in the coming months. The energy price shock is not the only factor in the economy right now, but it is a large part of it. If things go better than expected in Ukraine that could help keep energy prices down, which in turn would lessen the cost of living squeeze. But the converse is also true: if things deteriorate then the squeeze could worsen.



Second, the numbers today were, in one respect at least, a little better than expected. Economists had been pencilling in a 0.5 per cent fall in GDP in the third quarter, so a 0.2 per cent fall is considerably less bad. Moreover a chunk of that deterioration was down to the extra bank holiday due to the Queen's funeral. Adjust for that and the economy was perhaps "only" flatlining. And it's quite possible this fall gets revised in coming months.

That being said, nearly every other economic metric is pointing towards a period of weakness, if not recession, in the coming years. But it's worth being very wary indeed of any forecasts telling you quite how long and quite how deep. We are living in particularly uncertain times.

Newsletter

Related Articles

0:00
0:00
Close
Hong Kong Industry Group Calls for HK$20 Billion Support Fund to Ease Property Market Stress
Joe Biden’s Post-Presidency Speaking Fees Face Weak Demand amid Corporate Reluctance
Charlie Kirk's murder will break the left's hateful cancel tactics
Kash Patel erupts at ‘buffoon’ Sen. Adam Schiff over Russiagate: ‘You are the biggest fraud’
Homeland Security says Emmy speech ‘fanning the flames of hatred’ after Einbinder’s ‘F— ICE’ remark
Charlie Kirk’s Alleged Assassin Tyler Robinson Faces Death Penalty as Charges Formally Announced
Actor, director, environmentalist Robert Redford dies at 89
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
JD Vance Says There Is “No Unity” with Those Who Celebrate Charlie Kirk’s Killing, and he is right!
Trump sues the 'New York Times' for an astronomical sum of 15 billion dollars
Florida Hospital Welcomes Its Largest-Ever Baby: Annan, Nearly Fourteen Pounds at Birth
U.S. and Britain Poised to Finalize Over $10 Billion in High-Tech, Nuclear and Defense Deals During Trump State Visit
China Finds Nvidia Violated Antitrust Laws in Mellanox Deal, Deepens Trade Tensions with US
US Air Force Begins Modifications on Qatar-Donated Jet Amid Plans to Use It as Air Force One
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
Elon Musk Retakes Lead as World’s Richest After Brief Ellison Surge
U.S. and China Agree on Framework to Shift TikTok to American Ownership
London Daily Podcast: London Massive Pro Democracy Rally, Musk Support, UK Economic Data and Premier League Results Mark Eventful Weekend
This Week in AI: Meta’s Superintelligence Push, xAI’s Ten Billion-Dollar Raise, Genesis AI’s Robotics Ambitions, Microsoft Restructuring, Amazon’s Million-Robot Milestone, and Google’s AlphaGenome Update
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Musk calls for new UK government at huge pro-democracy rally in London, but Britons have been brainwashed to obey instead of fighting for their human rights
Elon Musk responds to post calling for the murder of Erika Kirk, widow of Charlie Kirk: 'Either we fight back or they will kill us'
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
USA: Office Depot Employees Refused to Print Poster in Memory of Charlie Kirk – and Were Fired
Proposed U.S. Bill Would Allow Civil Suits Against Judges Who Release Repeat Violent Offenders
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
French Debt Downgrade Piles Pressure on Macron’s New Prime Minister
US and UK Near Tech, Nuclear and Whisky Deals Ahead of Trump Trip
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
Anesthesiologist Left Operation Mid-Surgery to Have Sex with Nurse
Tens of Thousands of Young Chinese Get Up Every Morning and Go to Work Where They Do Nothing
The New Life of Novak Djokovic
The German Owner of Politico Mathias Döpfner Eyes Further U.S. Media Expansion After Axel Springer Restructuring
Suspect Arrested: Utah Man in Custody for Charlie Kirk’s Fatal Shooting
In a politically motivated trial: Bolsonaro Sentenced to 27 Years for Plotting Coup After 2022 Defeat
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
ChatGPT CEO signals policy to alert authorities over suicidal youth after teen’s death
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
×