Revised data from the Office for National Statistics (ONS) taking into account stronger output in the construction sector show the economy contracted by 0.5% during the quarter, not the 0.7% it announced last month (see earlier story).

GDP figures, which measure the value of all the goods and services produced in the economy, are used to measure economic growth. The ONS always refines its GDP calculations because the figures for the final month of each quarter are based on partial information.

However, the adjustment does not change the overall picture of the UK economy, which has been broadly flat for the past two years and still stands more than 4% below its peak in 2007.

A number of analysts believe GDP will rebound in the current quarter, partly due to the impact of the Olympics but two factors waiting in the wings are very worrying. The Spanish owned bank Santander is increasing its standard variable rate mortgages from 4.24% to 4.74% from October despite Bank of England base rates remaining unchanged at 0.5%. Although at first sight this appears to be a small increase it will add £44/month onto the cost of an average £150,000 mortgage. Other banks are expected to follow suit.

The second factor is Scottish & Southern Energy’s (SSE) announcement that energy bills will increase by 9% also in October adding about £10/month to the average dual fuel bill. SSE is the second largest energy supplier and  others are expected to follow its lead.

With one in three adults declaring in a Moneysupermarket survey that an increase in outgoings of £50/month would be unsustainable these increases may well be enough to push many households beyond the affordability tipping point.

With CPI inflation sitting at 2.6% and wage growth at just over 1%, disposable income will continue to be squeezed as 2012 draws to a close heralding a poor Christmas for the UK’s already struggling retail sector.