By William Schomberg and Andy Bruce
LONDON (Reuters) – Britain’s financial system did not develop within the third quarter, official figures confirmed on Monday, including to the indicators of a slowdown that has forged a shadow over Prime Minister Keir Starmer’s new authorities.
The Workplace for Nationwide Statistics lowered its estimate for the change in gross home product output to 0.0% within the July-to-September interval from a earlier estimate of 0.1% progress.
The ONS additionally lower its estimate for progress within the second quarter to 0.4% from a earlier 0.5%.
Starmer and his finance minister Rachel Reeves took energy in early July, warning of the poor state of the financial system earlier than asserting tax will increase for companies in a finances on Oct. 30 that has alarmed many employers.
Analysts mentioned the numbers instructed the financial system had floor to a halt over the complete second half of the 12 months.
The Financial institution of England final week forecast that the financial system will present zero progress within the fourth quarter. But it surely stored borrowing prices on maintain due to the dangers nonetheless posed by inflation.
Paul Dales, chief UK economist at consultancy Capital Economics, mentioned the GDP downgrade was brought about partly by weaker demand for exports whereas client spending at residence held up.
“Our hunch is that 2025 will be a better year for the economy than 2024,” Dales mentioned. “But more recent data suggest the economy doesn’t have much momentum as the year comes to a close.”
A separate survey from Lloyds (LON:) Financial institution confirmed confidence amongst companies fell to its lowest degree of 2024 in December.
Information from the Confederation of British Business – based mostly on beforehand launched surveys – confirmed corporations anticipated exercise to fall within the first three months of 2025.
Alpesh Paleja, a CBI economist, mentioned the figures “suggest that the economy is headed for the worst of all worlds – firms expect to reduce both output and hiring, and price growth expectations are getting firmer.”
The federal government’s hike in social safety contributions for employers was exacerbating weak demand, Paleja mentioned.
Reeves mentioned Monday’s GDP knowledge confirmed she confronted an enormous problem “after 15 years of neglect” beneath earlier Conservative-led governments however that her finances would create sustainable long-term progress.
The ONS mentioned there was no progress within the companies sector within the third quarter. A 0.7% enhance in development was offset by a 0.4% fall in manufacturing.
Bars and eating places in addition to authorized corporations and promoting have been among the many weakest sectors within the three months to the top of September, it mentioned.
The info additionally confirmed no progress in residing requirements and that households had dipped into their financial savings.
The ONS mentioned Britain’s present account deficit shrank to 18.1 billion kilos within the third quarter from 24 billion kilos within the April-to-June interval.
The Reuters ballot of economists had pointed to a shortfall of twenty-two.5 billion kilos.
