The UK economy contracted by 0.4% in the third quarter of the year against the previous quarter, according to official figures, meaning the country is still in recession. It contracted by 5.2% on a year ago.

However, the Office for National Statistics figures are only the first estimates and could still be revised up or down at a later date.

Manufacturing output posted a quarter-on-quarter decrease of 0.2%. Output of production industries as a whole (manufacturing, energy and mining) fell by 0.7%.

On the same quarter a year ago, manufacturing was 10.6% down and production output 10.4% down.

The largest sector of the economy — the service sector — also posted a fall in output of 0.2% compared with the previous quarter and was 3.8% down on a year ago.

Forecasts

The economy is expected to contract by between 3.9% and 4.5%, according to a Treasury collation of around 40 City and academic forecasts. The midpoint (median) forecast is for a 4.3% contraction.

However, next year the consensus is that the UK will recover and the forecasts for GDP in 2010 range from a 0.5% contraction up to 2.6% growth. The median forecast is for 1.2% growth.

The Treasury’s own forecast is for growth of between 1% and 1.5% next year, but that may change come Chancellor Darling’s Pre-Budget speech later this year.

www.statistics.gov.uk/pdfdir/gdp1009.pdf

www.hm-treasury.gov.uk/d/200910forcomp.pdf