Chancellor Rachel Reeves said she was “not satisfied with these numbers” after the ONS released its first quarterly estimate for July to September.
In comparison, there was substantial expansion of 0.7% and 0.5% in the first two quarters of the year respectively, when the economy bounced back from the technical recession the country fell into in the second half of 2023.
According to ONS estimates, UK GDP declined by 0.1% month-on-month in September, from 0.2% growth in August and no growth in July.
‘Real’ GDP per head is estimated to have fallen by 0.1% in Q3 2024, and is flat compared with the same quarter a year ago.
Services output increased by 0.1% versus 0.6% in the previous quarter, with only eight of the 14 sub-sectors showing growth during the same period, while production experienced back-to-back quarters of negative growth falling by 0.2% in Q3, led by declines in electricity, gas, steam and air conditioning supply.
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‘Lacklustre performance’
Alice Haine, personal finance analyst at Bestinvest, said: “The lacklustre performance in the three months to September reflects the toll the Government’s repeated warnings of a ‘painful’ Budget had on business and consumer confidence.
“While some of the speculation around changes to personal taxation did not materialise, the £40bn in tax rises Chancellor Rachel Reeves did deliver in her maiden fiscal statement is a lot for an economy to absorb, particularly when businesses are expected to shoulder most of that burden.”
Ed Monk, associate director at Fidelity International, said: “Today’s dip in the growth rate shows the task that lies ahead for policymakers – the economy [shrank] month-on-month in September and barely grew at all in the third quarter overall. The Government has emphasised the need for growth, but right now, even the modest official forecasts of a 2% rise in GDP next year would represent a significant improvement on the current trend.
“The fact the economy is still growing on a quarterly basis does offer some encouragement, especially with interest rates due to fall and help activity in the next year. Underlying data has been mixed with retail activity seeming to be picking up but with fewer job vacancies and unemployment ticking higher. Meanwhile, taxes on employers are due to rise from April and there may also be new trade policies from the US to navigate following Donald Trump’s victory in the presidential election.”
