London (Parliament Politics Magazine) – The UK’s economy expanded by only 0.1% between July and September 2024, according to a report from the Office for National Statistics (ONS).
UK GDP saw a 0.1% drop in September with the services sector flat growth and a decline in manufacturing and construction according to the Office for National Statistics.
In the third quarter, the economy grew by 0.1% marking a slowdown from 0.5% growth recorded in Q2.
Economists and the Bank of England surveyed by Reuters expected the UK economy to grow 0.2% in the July-September period, showing a slowdown from the rapid recovery in 2024 after last year’s mild recession.
Liz McKeown, ONS director of economic statistics said, “Generally, growth was subdued across most industries in the latest quarter. In September, the economy shrank a little”.
He added, “Services showed no growth with a notable increase in car sales offset by a slow month for IT companies. Production fell overall, driven by manufacturing, though there was an increase in oil and gas extraction”.
Sir Keir Starmer, last year committed that a Labour government would make the UK the fastest-growing economy in the G7 countries as part of his five long-term visions for the country.
The Office for Budget Responsibility (OBR) also informed that Rachel Reeve’s £40bn in a tax increase, announced in the budget will slow long-term growth between 2026 to 2028 as compared to previous predictions.
According to a recent poll by the Institute of Directors two-thirds of business leaders believe that the budget fails to support the government’s growth strategy.
Chancellor Rachel Reeves in response to the figures said, “Improving economic growth is at the heart of everything I am seeking to achieve, which is why I am not satisfied with these numbers. At my Budget, I took the difficult choices to fix the foundations and stabilise our public finances”.
She added, “Now we are going to deliver growth through investment and reform to create more jobs and more money in people’s pockets, get the NHS back on its feet, rebuild Britain and secure our borders in a decade of national renewal.”
Last week, the Bank of England revised its 2024 growth forecast reducing it to 1% from 1.25%. While the central bank remains optimistic for 2025, citing a short-term boost for the government’s big spending funding under Finance Minister Rachel Reeves.
Ruth Gregory, Deputy chief UK economist said, “Overall, despite the contraction in September, we still expect GDP growth to pick up in the coming quarters as the government’s debt-financed spending boosts activity and as the drags from higher inflation and higher interest rates continue to fade.
He continued, “Even so, we have become a bit more concerned about underlying weakness in the economy and the risks to our GDP forecast have shifted slightly to the downside”.
NIESR associate economist Hailey Low stated: “Today’s Q3 GDP figures, though less robust than in the first half of the year, reflect the impact of pre-Budget uncertainty, adding, “More notably, it is disappointing that the Chancellor did not fully leverage her landmark Budget last month to introduce measures addressing the UK’s low productivity growth, tackling growth inertia, and stimulating long-term economic growth”.
A senior economist at the Resolution Foundation, Simon Pittaway, insisted, “After bouncing back from recession earlier this year, Britain’s recovery is already running out of steam.
“The UK has fallen below the US at the top of the G7 GDP growth leaderboard, with growth slowing, wage rises shrinking and employment starting to fall”
He added, “The UK has been a GDP rollercoaster over the past 12 months, but its medium-term performance has been staid and stagnant”.
After recent US elections concerns have been raised over the global economic repercussions of Trump’s second term. While his planned tariffs are expected to fuel inflation and severely affect Europe. Some analysts believe that the British economy could find new opportunities amid these changes.
Andrew Bailey, Bank of England Governor, last week briefed on the bank’s position regarding Trump’s tariff agenda, though he acknowledged risks about the global fragmentation.
He told reporters during the press conference, “Let’s wait and see where things get to. I’m not going to prejudge what might happen, what might not happen”. Today at 7:33 am in London, the British pound gained 0.1% against the US dollar while it slipped 0.15% against the euro after Friday’s GDP figures.