UK Economy Experiences Zero Growth Between July and September: Official Revised Data
The UK economy saw zero growth between July and September of 2023, according to revised official figures. This update follows a series of disappointing economic reports, including rising inflation at its fastest pace in eight months and an unexpected economic contraction in October.
This revised figure is a blow to the government, which has prioritized boosting economic growth. Chancellor Rachel Reeves acknowledged that the challenge of repairing the economy after "15 years of neglect" is significant. Meanwhile, shadow chancellor Mel Stride critiqued the Labour government's handling of the economy, saying Monday's figures indicated "growth has tanked on Labour's watch."
Business Groups Express Concerns
The Confederation of British Industry (CBI), a leading business group representing 170,000 firms, warned that the economy is heading toward a "steep decline in activity," with expectations for the first three months of 2025 at their weakest in over two years. Their recent survey, conducted between November 25 and December 12, shows that businesses across all industries are bracing for a tough start to the new year.
Additionally, a survey by the British Retail Consortium (BRC) revealed concerns over a "January spending squeeze." Retailers are facing declining sales growth, leading them to raise prices or cut costs, including store closures and hiring freezes.
Impact on Businesses and Consumers
Mick Dore, general manager of the Alexander Pub in Wimbledon, shared concerns about rising costs due to the planned increase in National Insurance Contributions for businesses. He noted that although December has been a busy month with work parties, the rising costs in April could affect the pub's operations. Despite these challenges, Dore remained optimistic, believing that the business will manage to weather the storm.
Looking Ahead: Potential Recession?
Several economists have weighed in on the current economic climate, with Paul Dales, chief economist at Capital Economics, suggesting that while some businesses and households have paused spending and investment, it is still early to see the full impact of Labour policies. He believes that the UK could see a boost in the second half of 2024 as the effects of higher interest rates subside.
However, Simon French, chief economist at Panmure Liberum, noted that the revised figures indicate a loss of momentum in the economy. He raised concerns about whether this is a typical slowdown following a general election or a more serious economic issue leading to a possible recession in 2024.
GDP Growth Revised Down
The latest revisions also show that the UK economy grew by 0.4% in Q2 2024 instead of the previously reported 0.5%. The Office for National Statistics (ONS) explained that sectors like bars, restaurants, legal firms, and advertising had performed worse than initially estimated. Furthermore, real household disposable income showed no growth, highlighting the ongoing financial strain on UK households.