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The UK economy has performed worse than previously thought and below the expectations of economists, new official figures show, meaning the country has taken the first step towards recession.

There’s been a downward revision to GDP, a key measure of economic growth, the Office for National Statistics (ONS) said on Friday morning.

Rather than remaining stagnant, as first thought, the economy contracted 0.1% in the three months from July to September.

Economists had been expecting growth of 0.2%.

A country is technically in recession after two three-month periods of a shrinking economy.

If the final data for the fourth quarter of 2023, from October to December – which will be released next year – shows a contraction, the country will officially be in recession.

Another amendment was made to the second quarter of this year, from April to June. Rather than growing 0.2%, as was previously announced, the ONS has said there was actually no growth.

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Changes were made to the statistics as regular monthly business surveys and VAT returns showed less spending, said the ONS director of economic statistics, Darren Morgan.

Weaker performances from smaller businesses, particularly hospitality and information technology (IT), influenced the adjustments, Mr Morgan said.

In the most recent quarter, film production, engineering and design, and telecommunication all faired “a little worse” than expected.

VAT data takes time to receive and process, he added.

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UK economy goes into reverse

In the latest three-month period there was a 0.2% fall in the large services sector, offsetting a 0.4% expansion in construction output and a 0.1% boost in the production sector.

It amounted to the biggest downturn in consumer-facing services since September 2021 when a COVID lockdown was imposed.

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UK car makers welcome tariff-free exports extension

Responding to the figures, Chancellor Jeremy 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.”

Data also published on Friday morning recorded a far above expectations 1.3% increase in retail sales volumes for November after a possible Black Friday boost. Expectations were for a 0.4% growth.

Retail sales figures are important as household consumption is the largest expenditure across the UK economy.

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Bradford: One child dies and four other people taken to hospital after house fire

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Bradford: One child dies and four other people taken to hospital after house fire

A child has died in a house fire in Bradford.

A woman and three other children managed to escape the property and are being treated in hospital for non-life-threatening injuries.

In a statement, West Yorkshire Police said: “At 1.08 this morning (5 May) police were called by the fire service to reports of a serious house fire on Kingsdale Drive, Bradford.

“A woman and three children managed to escape the property and were taken to hospital for treatment. Their injuries are not life-threatening.

Police at scene of fatal house fire in Bradford
Police at scene of fatal house fire in Bradford

“A fourth child was found inside the address and was sadly pronounced deceased at the scene,” police added.

“A scene is currently in place at the address and police are working with the fire investigators to establish the exact cause of the fire.”

This breaking news story is being updated and more details will be published shortly.

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Rishi Sunak urges Tories to stick with his leadership after party suffers shock election losses

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Rishi Sunak urges Tories to stick with his leadership after party suffers shock election losses

Rishi Sunak has urged Tories to stick with his leadership despite the Conservatives’ shock defeat in the West Midlands mayoral election, which capped a dire few days of results for the party.

Sir Keir Starmer called it a “phenomenal result” which was “beyond our expectations” as Labour’s Richard Parker ousted Tory incumbent Andy Street, who had held the role for seven years.

The margin of victory was a cruelly tight 1,508 votes, and compounded Conservative disappointment as it followed another loss to Sadiq Khan in London, who secured a record-breaking third term as the capital’s mayor.

Local elections live
The mayoral election results

“People across the country have had enough of Conservative chaos and decline and voted for change with Labour. Our fantastic new mayor Richard Parker stands ready to deliver a fresh start for the West Midlands,” Sir Keir said.

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‘Devastated’ Andy Street refuses to blame Sunak after West Midlands defeat

However, in an effort to win back those who had deserted his party over Labour’s stance on Gaza, he added: “I say directly to those who may have voted Labour in the past but felt that on this occasion that they couldn’t that across the West Midlands we are a proud and diverse community.

“I have heard you. I have listened. And I am determined to meet your concerns and to gain your respect and trust again in the future.”

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Labour suffered losses to independents and George Galloway’s Worker’s Party of Britain in areas with large Islamic populations as a result of the war between Israel and Hamas.

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Starmer speaks at East Midlands victory rally

But the party virtually swept the mayoral elections board across England, winning in Liverpool, South Yorkshire, West Yorkshire, and in Greater Manchester, where Andy Burnham returned to power.

The Tees Valley was the only remaining splash of blue left on the mayoral election map, where Lord Ben Houchen managed to cling to power despite a huge 14.1-point swing to Labour.

Lord Houchen’s victory was also mired by allegations he had sought to distance himself from Rishi Sunak and the Conservative Party at large during his campaign.

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Sadiq Khan re-elected as London Mayor

Losing Mr Street, who is widely respected in the Tory Party and had an impressive track record of bringing investment into the West Midlands, is a body blow to the prime minister.

Despite the drubbing, Mr Sunak urged his party to stick with his leadership and his plan for government.

In a statement, he said: “It’s been disappointing of course to lose dedicated Conservative councillors and Andy Street in the West Midlands, with his track record of providing great public services and attracting significant investment to the area, but that has redoubled my resolve to continue to make progress on our plan.

“So we will continue working as hard as ever to take the fight to Labour and deliver a brighter future for our country.”

Pic: Reuters
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Rishi Sunak with Tees Valley mayor Lord Ben Houchen Pic: Reuters

However, Suella Braverman, the former home secretary, was quick to lay the blame for Tory losses firmly at the door of Number 10.

But she said ousting Mr Sunak “won’t work”, adding: “The hole to dig us out of is the PM’s, and it’s time for him to start shovelling.”

She urged him to adopt “strong leadership, not managerialism” on tax, migration, small boats, and law and order.

But Mr Street took a different view, encouraging the party not to veer to the right.

Asked if he is worried the party is drifting to the right and over-emphasising the threat from Reform UK while “ignoring other voters”, the outgoing mayor told Sky News: “I would definitely not advise that drift.

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Analysis of local election and mayoral results

Read more:
Charts tell story of Conservative collapse
Who is the new West Midlands mayor Richard Parker?

“The psychology here is really very straightforward, isn’t it? This is the youngest, most diverse, one of the most urban places in Britain, and we’ve done, many would say, extremely well over a consistent period,” Mr Street said.

“The message is clear: winning from that centre ground is what happens.”

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‘We will give this region a fresh start’ – Labour’s Richard Parker

Results are in from 106 of the 107 councils in England that held elections on 2 May, and Labour has won 1,140 seats, an increase of more than 200.

The Liberal Democrats beat the Tories into second place, winning 521 seats, up nearly 100.

The Tories were just behind on 513 seats, down nearly 400.

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Conservative Andy Street suffers shock loss to Labour in West Midlands mayoral race in blow to Rishi Sunak

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Conservative Andy Street suffers shock loss to Labour in West Midlands mayoral race in blow to Rishi Sunak

Tory incumbent Andy Street has suffered a shock defeat to Labour in the West Midlands mayoral election after a partial recount was ordered.

Labour’s Richard Parker beat Mr Street by just 1,508 votes – 0.25% – to deliver a major blow to Rishi Sunak in the key electoral battleground after a hammering in the local elections.

With the race neck-and-neck, in the end it came down to the results in one borough – Labour-supporting Sandwell.

“This is the most important thing I will ever do,” Mr Parker said in his acceptance speech.

“I promise you that I will deliver jobs,” he added.

He told Sky News he would take buses “back into public control” and deliver the “largest programme of social housing we’ve had in this region for more than 40 years”.

And he thanked his predecessor, who he said had “led this region through a number of great challenges and you deserve great credit for that”.

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Mr Street told Sky News he was “personally devastated”, had “put my all into this”, and “genuinely believed we were making real progress across the region”.

He said it was “my campaign, totally”, adding: “I’m not going to try to push responsibility anywhere else. There’ll be no sloping shoulders from me.”

He wished his successor “all strength and wisdom”.

Labour leader Sir Keir Starmer said it was a “phenomenal result” and “beyond our expectations”.

He added: “People across the country have had enough of Conservative chaos and decline and voted for change with Labour.

“My changed Labour Party is back in the service of working people, and stands ready to govern.”

Labour's Richard Parker speaks as he is elected as the new Mayor of West Midlands, following the count at the International Convention Centre in Birmingham. Picture date: Saturday May 4, 2024.
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Labour’s Richard Parker has promised to deliver jobs

Local elections live
The mayoral election results

Ellie Reeves, Labour’s deputy national campaign co-ordinator, said it was a “significant victory”.

She added: “Right across the country people have voted for change and the message is clear – it’s time for a general election and a Labour government to get our country’s future back.”

Labour’s Sadiq Khan has secured a historic third term as London mayor with a convincing win over Conservative rival Susan Hall.

These results will increase pressure on the prime minister, who had been hoping for a repeat of the success enjoyed by Conservative Ben Houchen who held on as the mayor of Tees Valley.

Sam Coates, Sky News’s deputy political editor, said he had seen messages from Conservative MPs’ WhatsApp group.

One from former cabinet minister Simon Clarke, whom Coates said “wants Rishi Sunak to leave”, said: “These results are awful and should be a massive wake-up call.

“If we fight the same campaign in a few months [in the general election] we’ll get the same outcome or rather worse.

“Reform UK standing more candidates will cause greater damage.”

Read more:
The winners and losers
Charts tell story of Conservative collapse

Analysis: Labour’s future success is less clear-cut

The loss of either the Teesside or West Midlands mayoralties would give Tory rebels who want to change leader a “huge amount of fuel”, former Scottish Conservative leader Ruth Davidson said in the Electoral Dysfunction podcast.

Mr Street, who was seeking a third term in office, sought to distance himself from the Conservative brand during his campaign and instead ran on a personal platform.

Sky News recently revealed that Mr Street was sending out election literature with an endorsement from former prime minister Boris Johnson which urged people to “forget about the government”.

His campaign website also made no mention of Mr Sunak on its homepage and was coloured in green rather than Conservative blue.

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