9:11 am, November 10, 2023
The UK’s economy stagnated over the three months from July to September despite car sales growing.
The Office for National Statistics (ONS) said this morning that gross domestic product (GDP) – which measures the value of goods and services produced – showed no growth in the latest quarter.
However, the economy’s performance during the third quarter surpassed economists’ expectations.
The news comes a week after the Bank of England warned that the UK could face zero growth until 2025 but was still likely to avoid a recession.
Analysts had forecast a 0.2% fall for the quarter and a flat reading for September. But the ONS reported 0.2% growth in the economy for September.
That came amid a boost from the film production, health and education industries.
The ONS also revised growth downwards in August to 0.1%, from 0.2%, and reported a 0.6% decline for July.
ONS director of economic statistics Darren Morgan said: ‘The economy is estimated to have shown no growth in the third quarter.
‘Services dropped a little with falls in health, management consultancy and commercial property rentals.
‘These were partially offset by growth in engineering, car sales and machinery leasing.’
Economists said the manufacturing and construction sectors particularly helped to support growth over the end of the quarter.
They said that after the latest figures the UK looks likely to avoid a recession, despite concerns about the effect of recent significant interest hikes taken by the Bank of England in a bid to quash inflation.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: ‘The economy narrowly avoided contracting in Q3, and we continue to think that it can maintain this resilient performance in Q4.
‘We continue to think that the chances of a recession look low. We look for a 0.3% quarter-on-quarter increase in GDP in Q4 and expect that pace to be broadly maintained next year.’
Chancellor Jeremy Hunt said: ‘High inflation is the single greatest barrier to economic growth.
‘The best way to sustainably grow our economy right now is stick to our plan and knock inflation on its head.
‘The Autumn Statement [on November 22] will focus on how we get the economy growing healthily again by unlocking investment, getting people back into work and reforming our public services so we can deliver the growth our country needs.’
But shadow chancellor Rachel Reeves said: ‘These figures are further evidence that the economy is not working under the Conservatives and working people are worse off.’
Main image: Stefan Rousseau/PA
