Britain’s economy was flat in the third quarter — right?
Well, no actually. Although the official GDP growth headline was zero, a closer inspection of the figures shows that output actually declined very slightly — by 0.0285% to be precise.
The ONS statisticians just did what they always do, perfectly reasonably, and rounded it up to the published figure — 0.0%.
Tomorrow, the ONS number crunchers publish their first revision of that third quarter data. It will be worth watching closely. It will only take a tiny downward tweak to get it to a 0.05% fall. Then rounding to the nearest decimal point will work the other way — the official headline number will have to be changed to minus 0.1%.
That does not sound much — but bear with me.
If GDP fell in the third quarter, then we are half way to recession. So how’s the fourth quarter shaping up? Actually not well, thank you for asking. GDP fell 0.3% in October, putting a lot of pressure on November and December to produce some strong growth if another negative quarterly number is to be avoided.
There are a lot of “ifs” in this... but if third quarter GDP is revised down, and if fourth quarter GDP comes in negative too, then we are now in recession.
That’s very bad news for Rishi Sunak, who has staked his reputation on delivering growth this year as one of his famous five pledges. He will find it very hard to argue that the promise has been met if the economy slipped into recession in the second half of the year.
So keep a close eye on that revision tomorrow. It could deliver a very unwelcome present to Downing Street just before Chirstmas.
