London Daily

Focus on the big picture.
Friday, Nov 28, 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
UK Chancellor Reeves Defends Tax Rises as Essential to Reduce Child Poverty and Stabilise Public Finances
No Evidence Found for Claim That UK Schools Are Shifting to Teaching American English
European Powers Urge Israel to Halt West Bank Settler Violence Amid Surge in Attacks
"I Would Have Given Her a Kidney": She Lent Bezos’s Ex-Wife $1,000 — and Received Millions in Return
European States Approve First-ever Military-Grade Surveillance Network via ESA
UK to Slash Key Pension Tax Perk, Targeting High Earners Under New Budget
UK Government Announces £150 Annual Cut to Household Energy Bills Through Levy Reforms
UK Court Hears Challenge to Ban on Palestine Action as Critics Decry Heavy-Handed Measures
Investors Rush Into UK Gilts and Sterling After Budget Eases Fiscal Concerns
UK to Raise Online Betting Taxes by £1.1 Billion Under New Budget — Firms Warn of Fallout
Lamine Yamal? The ‘Heir to Messi’ Lost to Barcelona — and the Kingdom Is in a Frenzy
Warner Music Group Drops Suit Against Suno, Launches Licensed AI-Music Deal
HP to Cut up to 6,000 Jobs Globally as It Ramps Up AI Integration
MediaWorld Sold iPad Air for €15 — Then Asked Customers to Return Them or Pay More
UK Prime Minister Sir Keir Starmer Promises ‘Full-Time’ Education for All Children as School Attendance Slips
UK Extends Sugar Tax to Sweetened Milkshakes and Lattes in 2028 Health Push
UK Government Backs £49 Billion Plan for Heathrow Third Runway and Expansion
UK Gambling Firms Report £1bn Surge in Annual Profits as Pressure Mounts for Higher Betting Taxes
UK Shares Advance Ahead of Budget as Financials and Consumer Staples Lead Gains
Domino’s UK CEO Andrew Rennie Steps Down Amid Strategic Reset
UK Economy Stalls as Reeves Faces First Budget Test
UK Economy’s Weak Start Adds Pressure on Prime Minister Starmer
UK Government Acknowledges Billionaire Exodus Amid Tax Rise Concerns
UK Budget 2025: Markets Brace as Chancellor Faces Fiscal Tightrope
UK Unveils Strategic Plan to Secure Critical Mineral Supply Chains
UK Taskforce Calls for Radical Reset of Nuclear Regulation to Cut Costs and Accelerate Build
UK Government Launches Consultation on Major Overhaul of Settlement Rules
Google Struggles to Meet AI Demand as Infrastructure, Energy and Supply-Chain Gaps Deepen
Car Parts Leader Warns Europe Faces Heavy Job Losses in ‘Darwinian’ Auto Shake-Out
Arsenal Move Six Points Clear After Eze’s Historic Hat-Trick in Derby Rout
Wealthy New Yorkers Weigh Second Homes as the ‘Mamdani Effect’ Ripples Through Luxury Markets
Families Accuse OpenAI of Enabling ‘AI-Driven Delusions’ After Multiple Suicides
UK Unveils Critical-Minerals Strategy to Break China Supply-Chain Grip
Taylor Swift’s “The Fate of Ophelia” Extends U.K. No. 1 Run to Five Weeks
UK VPN Sign-Ups Surge by Over 1,400 % as Age-Verification Law Takes Effect
Former MEP Nathan Gill Jailed for Over Ten Years After Taking Pro-Russia Bribes
Majority of UK Entrepreneurs Regard Government as ‘Anti-Business’, Survey Shows
UK’s Starmer and US President Trump Align as Geneva Talks Probe Ukraine Peace Plan
UK Prime Minister Signals Former Prince Andrew Should Testify to US Epstein Inquiry
Royal Navy Deploys HMS Severn to Shadow Russian Corvette and Tanker Off UK Coast
China’s Wedding Boom: Nightclubs, Mountains and a Demographic Reset
Fugees Founding Member Pras Michel Sentenced to 14 Years in High-Profile US Foreign Influence Case
WhatsApp’s Unexpected Rise Reshapes American Messaging Habits
United States: Judge Dressed Up as Elvis During Hearings – and Was Forced to Resign
Johnson Blasts ‘Incoherent’ Covid Inquiry Findings Amid Report’s Harsh Critique of His Government
Lord Rothermere Secures £500 Million Deal to Acquire Telegraph Titles
Maduro Tightens Security Measures as U.S. Strike Threat Intensifies
U.S. Envoys Deliver Ultimatum to Ukraine: Sign Peace Deal by Thursday or Risk Losing American Support
Zelenskyy Signals Progress Toward Ending the War: ‘One of the Hardest Moments in History’ (end of his business model?)
U.S. Issues Alert Declaring Venezuelan Airspace a Hazard Due to Escalating Security Conditions
×