Economy went into reverse over the summer shrinking by 0.1% according to grim official figures

Economy went into reverse over the summer shrinking by 0.1% according to grim official figures – but Jeremy Hunt bats away fears of recession and hints tumbling inflation will mean more tax cuts in the New Year

GDP fell by 0.1 per cent between July and September, worse than the flat-lining that had previously been estimated.

Meanwhile the revised numbers from the Office for National Statistics (ONS) showed that there was no growth in the second quarter, compared to the 0.2 per cent it had initially detected.

After activity was projected to have slipped into the red in October it will fuel concerns of a technical recession – defined as two consecutive quarters of contraction.

But Jeremy Hunt tried to put a brave face on the numbers, saying the medium-term outlook was ‘far more optimistic’ with inflation falling.

The Chancellor has also hinted that falling inflation and interest rates might give him more scope to cut taxes.

ONS director of economic statistics Darren Morgan said: ‘The latest data from both our regular monthly business survey and VAT returns show the economy performed slightly less well in the last two quarters than our initial estimates.

‘The broader picture, though, remains one of an economy that has been little changed over the last year.

‘The latest VAT data, which takes a little time to receive and process means we now estimate the economy showed no growth in the second quarter, with weaker performances from smaller businesses, particularly those in both hospitality and IT than first shown.

‘We also now estimate the economy contracted slightly in the third quarter, when we previously reported no growth, with later returns from our business survey showing film production, engineering & design and telecommunications all performing a little worse than we initially thought.’

Mr Hunt said: ‘The medium-term outlook for the UK economy is far more optimistic than these numbers suggest.

‘We’ve seen inflation fall again this week, and the OBR (Office for Budget Responsibility) expects the measures in the autumn statement, including the largest business tax cut in modern British history and tax cuts for 29 million working people, will deliver the largest boost to potential growth on record.’

Analysts said ‘the mildest of mild recessions’ might have started in the third quarter.

A spokesman for Capital Economics said: ‘Whether or not there is a small recession, the big picture is that we expect real GDP growth to remain subdued throughout 2024.’