The UK financial system expanded by simply 0.1% within the third quarter of 2024, falling in need of the 0.2% development forecast by economists and marking a slowdown from the 0.5% enhance recorded within the second quarter.
The newest GDP figures, launched by the Office for National Statistics (ONS), revealed weakening momentum within the UK’s dominant companies sector.
In its first estimate of exercise for the three months to September, the ONS reported that output from each the companies and manufacturing sectors had eased. The slowdown has been attributed to lingering uncertainty surrounding the brand new Labour authorities’s price range and persistently excessive borrowing prices.
The companies sector, which contributes roughly 80% of UK GDP, grew by simply 0.1% through the quarter whereas development grew 0.8% and manufacturing fell by 0.2%.
ONS director of financial statistics Liz McKeown stated: “The economy grew a little in the latest quarter overall as the recent slowdown in growth continued. Retail and new construction work both performed well, partially offset by falls in telecommunications and wholesale. Generally, growth was subdued across most industries in the latest quarter.
“In September the economy shrank a little. 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.”
Labour, which got here to energy earlier this yr, has positioned financial development as a key coverage precedence. However, the lacklustre knowledge highlights the difficulties of reaching this ambition within the face of fiscal constraints and subdued private-sector exercise.
Last month’s price range noticed the chancellor growing taxes and borrowing in a transfer Labour defended as essential to stabilise public funds and enhance companies. The measures included a hike in employers’ nationwide insurance coverage contributions, which many companies argue may dampen job creation and discourage funding.
Meanwhile, the Bank of England has lowered rates of interest twice this yr, with the newest lower bringing charges right down to 4.75%. However, borrowing prices stay elevated in comparison with pre-pandemic ranges, maintaining stress on UK households and companies.
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