The UK economy showed no growth in Q3 2024, according to revised GDP figures from the Office for National Statistics (ONS), sparking concerns of a looming recession.
The data represents a downward revision from an earlier estimate of 0.1% growth, with GDP per capita shrinking by 0.2%.
Laith Khalaf, head of investment analysis at AJ Bell, said: “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.”
The Bank of England has further dampened optimism, forecasting zero growth for Q4 2024, a downgrade from its earlier 0.3% growth estimate.
If accurate, this would mean no economic growth in the second half of 2024, putting the UK perilously close to a technical recession—defined as two consecutive quarters of negative growth.
Khalaf also highlighted business concerns about Labour’s recent Budget: “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.”
The lack of economic momentum undermines hopes of an “economic dividend” from the political stability brought by Labour’s strong parliamentary majority.
Khalaf remarked: “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.”
