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Britain’s economy contracted by a little more than first estimated in the third quarter of this year, and business investment performed poorly, according to official data.

Economic output fell by 0.3% during the July-September quarter, compared with a previous estimate of 0.2%, said the Office for National Statistics.

Business investment fell by 2.5%, compared with a previous estimate of a 0.5% drop.

While the dominant services sector expanded 0.1% in the quarter, declines in manufacturing and construction dragged the headline gross domestic product figure down.

The ONS also revised down its estimates for growth across 2022, meaning the UK economy remains 0.8% smaller than it was before the pandemic.

It said the figures put Britain bottom in the Group of Seven nations in terms of quarterly economic growth.

Darren Morgan, ONS director of economic statistics, said: “Our revised figures show the economy performed slightly less well over the last year than we previously estimated, with manufacturing and electricity generation notably weaker.

“Household incomes continued to fall in real terms, albeit at a slower rate than in the previous two quarters, while – taking account of inflation – household spending fell for the first time since the final Covid-19 lockdown in the spring of 2021.”

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LIVE NEWS

4.30pm: London loses early gains

Early gains on the London stock market have been reversed as US markets fell back following disappointing results from Micron and as investor worries about rising interest rates re-surfaced on the back of strong US GDP numbers.

Pub companies, J D Wetherspoon and Mitchells and Butler fell back on reports of weak trading in pubs and restaurants amid industrial action on the railways.

Retailer Superdry was a stand-out gainer on news of strong trading and a new loan facility which sent shares higher.

The FTSE 100 closed down 28.04 points at 7,469.28.

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3pm: Bruce stepping down

Shares in the investment company slid by 2.2pc following the news that Stephanie Bruce, one of the UK’s most high-profile women in finance, is stepping down from the role she took on in June 2019, after leaving accountancy firm PwC.  Full story here

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2.15pm: US economy grows

The US economy grew faster than previously predicted between July and September with growth in the third quarter now seen at 3.2% against an initial estimate of 2.9% and ahead of Street expectations.

Weekly jobless claims of 216,000 were broadly in line with forecasts.

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2.35pm: Wall Street opens lower

The Dow Jones Industrial Average opened down 0.4% and the S&P 500 was down 0.7%,while the Nasdaq Composite slipped 1.4%.

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2pm: Rail fares rise

A 5.9% rise in rail fares in England has sparked an angry backlash as travellers face more cancellations because of the ongoing strike action. Full story here

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11.30am: Party cancellations

Hospitality businesses across the UK have reported a 30% cancellation rate on bookings, as Christmas parties were called off, mainly as a result of strike action on the railways.

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8.05am: The FTSE 100 opened 14 points higher at 7,511.61.

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7am: Deloitte sanctioned

Big Four accountant Deloitte has been handed a near-£1m penalty and a severe reprimand over its audit of building materials company SIG’s financial statements. Full story here

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Last night’s close

The FTSE 100 broke out of its slumber and roared 126.7 points (1.72%) higher to close at 7,497.32 as the Santa rally finally arrived.

JD Sports Fashion jumped 6.09% on positive read-across from Nike’s second-quarter numbers.

Shares in Capricorn Energy rose 1.2%, or 3p, to 249.4p amid growing unrest among shareholders who want to see changes on the board.

Full market report here

Traders were determined to bring some Christmas cheer to the market with London expected to build on yesterday’s Santa rally on the back of an uplift in New York.

The Dow Jones Industrial Average ended up 1.6%, and the S&P 500 and the Nasdaq Composite both added 1.5%.

At the end of an inflation-fuelled year the US Consumer Confidence smashed all estimates, rebounding more than expected as cost of living expectations eased and gas prices cooled.

In Asia, Tokyo’s Nikkei 225 index closed up 0.5%. In China, the Shanghai Composite was down 0.5%, while the Hang Seng index in Hong Kong was up 2.3% in late trade.

Sterling was quoted at $1.2127 early today from $1.2093 at the close of the London stock market.