Today’s revelation of a sharp slowdown in UK economic growth in the third quarter, to a crawl, has been greeted with disappointment.
UK gross domestic product rose by just 0.1% quarter on quarter in the three months to September, data published today by the Office for National Statistics reveal. There was a 0.1% month-on-month fall in GDP in September.
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Economists polled by Reuters had, overall, forecast the UK would have grown by 0.2% in the third quarter. UK GDP rose by 0.5% in the second quarter.
Hailey Low, associate economist at the National Institute of Economic and Social Research think tank, said: “Today’s Q3 GDP figures, though less robust than in the first half of the year, reflect the impact of pre-Budget uncertainty.
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“More notably, it is disappointing that the Chancellor [Rachel Reeves] did not fully leverage her landmark Budget last month to introduce measures addressing the UK’s low productivity growth, tackling growth inertia, and stimulating long-term economic growth."
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said: “These figures suggest that the economy went off the boil even before the Budget, as weaker business and consumer confidence helped weaken output across the third quarter, particularly in September.
“The third-quarter outturn paints a more realistic picture of the UK’s underlying growth trajectory given longstanding challenges over poor productivity and persistent supply-side constraints.”
He added: “Economic growth in the final quarter of this year is likely to be similarly modest with looming tax rises and growing global uncertainty likely to spark a renewed restraint to spend and invest, despite lower interest rates.”
Matt Swannell, chief economic adviser to the EY ITEM Club think tank, did highlight hopes of a “modest tailwind” from policy measures on both sides of the Atlantic.
He said: “Measures announced in the Chancellor's Autumn Budget suggest fiscal policy will be less restrictive than under the previous government's plans, while the effects from looser US fiscal policy should also act as a modest tailwind.
“Firm real income growth, together with some dis-saving, should support stronger consumer spending to an extent. However, tight financial conditions will continue to weigh on disposable incomes as the lagged impact of past interest-rate rises continues to emerge."
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