UK Economy Fails To Grow In Q3 But Manages To Avoid A recession

Read Time:1 Minute

The Office for National Statistics revealed that the UK’s economy failed to grow in the third quarter of the year, but managed to avoid a recession. This was a surprise to many analysts who had predicted a 0.1% fall in GDP. Instead, there was no change. 


Although September saw a 0.2% increase in GDP, the economy was revised down to 0.1% from 0.2% in August. Despite this, Paul Dales, chief economist with consultancy Capital Economics, suggested that the economy was not weak enough to reduce core inflation and wage growth quickly. 


As a result, he believes that the Bank of England will not be able to cut interest rates until late 2024, rather than in mid-2024 as previously expected. The Bank of England announced last week that it expected zero economic growth next year, which is a difficult backdrop for Prime Minister Rishi Sunak, who is widely expected to call a national election in 2024. Despite this, the Bank kept interest rates at a 15-year high as it continued to battle an inflation rate that is three times higher than its 2% target. 


The services sector fell by 0.1%, industrial production was stagnant, and construction grew by 0.1% in the three months to September. Britain’s economy was 1.8% above its level in late 2019, making it stronger than that of Germany but weaker than the United States, where the economy has grown by more than 7% from its pre-pandemic level. 


In response to the data, Finance Minister Jeremy Hunt stated that high inflation remains the biggest barrier to growth and he will announce plans to unlock investment and get people back into work in his November 22 budget update statement.

Leave a Reply

Your email address will not be published. Required fields are marked *