UK economy 'shrinking less than estimated'

The latest official figures confirm that the UK economy continued to shrink between July and September.

However, the rate at which it contracted in the third quarter is slightly less than originally thought, according to the Office for National Statistics, which says that the UK's gross domestic product (GDP) fell by 0.3% compared to the previous quarter.

This latest figure revises last month's 0.4% estimate, prior to which there was hope that the UK may already have emerged from recession.

The final Q3 figures saw service sector output and manufacturing output both revised upwards, from a fall of 0.2% to one of 0.1%. However, overall production fell by more than was first estimated, due to lower oil and gas extraction.

British Chambers of Commerce (BCC) chief economist David Kern renewed the organisation's call for the Bank of England to continue pumping money into the UK economy, calling for "urgent action" to end the recession.

"This should focus on sustaining demand and removing the obstacles restricting companies' ability to invest and grow," he said.

"Next month's Pre-Budget Report will be a perfect opportunity to announce some of the most pressing measures."

Other major world economies, such as France, Germany, Japan and the US, have all announced they are experiencing growth once again, leading some to believe that the UK's official figures could be wrong.

Jim O'Neill, chief economist from Goldman Sachs, told BBC Radio Four's Today programme that the real state of the economy is better than figures suggest, but that the perception of gloom is being reinforced by the media.

"In the current situation in the UK, where there is so much emotion about this recession and crisis, it's compounding the problem," he added.

IMAGE Peter Byrne/PA Wire