- Economy didn’t grow in Q3, according to ONS data released today
- This is unfestive news for the chancellor and PM
- No economic dividend from political stability on show yet
- If the Bank of England’s forecast proves correct, we may have no growth in the second half of 2024
Laith Khalaf, head of investment analysis at AJ Bell, comments:
“The UK economy didn’t grow at all in the three months to September according to the second estimate of GDP growth released by the Office for National Statistics today. That’s down from the meagre 0.1% registered in the first estimate. Worse still, early estimates suggest GDP per capita actually shrank in Q3, to the tune of 0.2%.
“This is unfestive news for the chancellor and the prime minister, who have promised to get the UK growing again. Clearly the government can’t be expected to turn on the taps of the whole economy in its first three months, but the fact GDP has flatlined does outline the scale of the problem.
“It also comes as business groups have criticised Labour’s first Budget in which Rachel Reeves chose to increase National Insurance for employers, which businesses are understandably warning will cost jobs and put upward pressure on inflation.
“Last week the Bank of England said it expected zero growth in the fourth quarter of 2024, again a downgrade from their previous forecast of 0.3%. If that proves to be correct, it could mean no growth in the whole second half of this year. That would pretty be close to a technical recession, defined as two quarters of negative economic growth.
“All in all it’s a pretty dreary economic picture as we enter the new year. The latest readings and forecasts also somewhat put the kibosh on the idea that the UK might reap an economic dividend from the political stability provided by a new government with a strong majority. Then again, we don’t know whether the alternatives might have been worse for the economy.”
