- UK GDP grew 0.1% in the three months to September – less than the 0.2% expected
- The economy contracted 0.1% in September
- Personal service activities industry fell 3.1% in Q3
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK GDP figures:
“The start of the year looked so promising as the UK economy hurtled back from a short and shallow recession with relatively chunky GDP growth. But that momentum was short lived, and the honeymoon period often enjoyed by a new government fizzled out under the damp weight of uncertainty and hard truths.
“There were a few bright spots, as construction output grew 0.8% over the third quarter, buoyed by infrastructure projects, and there are signs that housebuilding should pick up over the coming months thanks to two interest rate falls and a promise to reform planning, but even amongst housebuilders there is concern that build costs are creeping up.
“The government might desire growth and the chancellor might have been making more of the right noises during her Mansion House speech last night, but many businesses fear measures taken in her first Budget could have the opposite effect.
“Nervousness from households ahead of the Budget dampened consumer behaviour and even though the retail sector did pick up in a bit in September people were being cautious, especially when it came to those nice personal investments such as haircuts and manicures.
“For business the spectre of higher taxes was already pushing many companies to employ a wait and see approach when it came to investment and hiring plans. The big question is what will happen to those plans now the dust has settled and the numbers have been crunched.
“Company after company have warned that the increase to employer NI will inevitably impact their headcount and if more money is being paid in taxes there’s less money to spend on growth.
“Change takes time and increased investment in things like public services will have an impact. But change can also have unintended consequences and at the moment the UK economy looks like it’s back on life support.”
