UK economic system stagnated in third quarter, revised figures present

The UK economic system recorded no development within the three months to September. revised figures from the British Workplace for Nationwide Statistics, confirmed on Monday.

A preliminary estimate For the third quarter, revealed by the ONS final month, UK GDP elevated by 0.1% throughout this era. Nevertheless, remaining information launched on Monday confirmed GDP development of 0% in comparison with the earlier quarter.

THE Pound sterling was barely decrease towards the U.S. greenback on Monday, buying and selling round $1.2566 as of 8:37 a.m. London time.

Monday’s figures deal one other blow to the British economic system, after a sequence of poor information dampened confidence and raised questions concerning the newly elected Labor authorities’s fiscal technique.

Earlier this monthONS information confirmed the UK economic system unexpectedly contracted by 0.1% in October. That is the second consecutive month-to-month decline within the nation’s GDP, following a decline of 0.1%. in September.

Trying forward, Paul Dales, chief UK economist at Capital Economics, mentioned he expects the UK economic system to additionally stagnate within the remaining quarter of 2024 – however his view shouldn’t be totally pessimistic .

“Total, this information means that after an distinctive first half, the economic system stalled within the second half as a result of a mixture of the persistent drag from rising rates of interest, overseas demand weaker and a few coverage issues within the price range,” he mentioned in a observe Monday.

“Our hunch is that 2025 can be a greater yr for the economic system than 2024. However more moderen information suggests the economic system would not have a lot momentum heading into the tip of the yr.”

Inflation, in the meantime, seems to be rising once more. The ONS mentioned last week that inflation within the UK reached 2.6% in November, marking the second consecutive month of rising costs.

The Financial institution of England then maintained its key rate of interest stable at 4.75%. Whereas markets weren’t anticipating any charge modifications at Thursday’s Financial Coverage Committee (MPC) assembly, it was shocking that three MPC members voted in favor of a charge minimize (a ballot Reuters predicted that just one member would vote in favor of a discount).

Despite the fact that Governor Andrew Bailey has previously reported 4 charge cuts may very well be potential subsequent yr, with merchants divided on when the Financial institution of England will begin reducing rates of interest once more. LSEG information exhibits markets count on additional holding on the February MPC assembly, with a small majority of merchants anticipating a 25 foundation level charge minimize in March.

This follows UK Finance Minister Rachel Reeves. end of October unveiled the Labor authorities’s first price range since changing the long-serving Conservative authorities in July.

The price range included plans by Prime Minister Keir Starmer’s authorities to lift taxes by £40 billion ($50.5 billion). Reeves mentioned on the time that this may be achieved by a sequence of latest insurance policies, together with a rise in employers’ nationwide insurance coverage contributions – a tax on earnings – in addition to a rise in earnings tax. capital features and capital features tax. removal of winter fuel payment to retirees.

Some insurance policies have been the topic of appreciable criticism. The rise in nationwide insurance coverage social safety contributions, for instance, has prompted warnings firms that they are going to be much less more likely to rent new staff, with a report from the recruitment web site Certainly, earlier this month, suggesting the coverage had already hit UK job vacancies.