The UK economy experienced a slowdown in the summer, with GDP only growing by 0.1% in the July-September quarter, according to data from the Office for National Statistics. This is a decrease from the 0.5% growth seen in the previous quarter and below the expected 0.2% growth rate. The services sector grew by 0.1%, construction by 0.8%, but production fell by 0.2% in the same quarter.
Experts believe that budget uncertainty played a significant role in the economic slowdown, with economists like Hailey Low from NIESR pointing out that the lack of measures addressing low productivity growth and economic stagnation in the Chancellor’s budget may have contributed to the weak growth. Investment strategist Lindsay James also mentioned the impact of negative messaging from the government leading up to the budget.
The UK’s GDP growth places it towards the bottom of the G7 countries, with only a 0.1% increase in the last quarter. This is in contrast to countries like the US, France, and Canada, which saw higher growth rates. The CBI attributes the slowdown to the uncertainty surrounding the budget, which affected decision-making in businesses.
In September, the economy shrank slightly, with declines in manufacturing output and information and communication services. Real GDP per head also fell by 0.1% in the third quarter of 2024, indicating a decrease in living standards for the population.
Bank of England Governor Andrew Bailey highlighted the negative impact of Brexit on the UK economy, emphasizing the need to rebuild relations with the EU. The government’s aim to deepen cooperation with the EU while not re-entering the single market or customs union could pose challenges for future economic growth.
As the Labour government faces its first quarterly growth report, economists predict a modest growth rate of 0.2% for July-September. However, the slow-moving economy and the impact of the budget could influence future growth prospects. Despite additional spending outlined in the recent budget, the economy is expected to receive only a short-term boost.
Overall, the UK economy’s performance in the summer indicates a need for targeted measures to address productivity growth, economic stability, and Brexit-related challenges to ensure sustained growth in the future.
