Today’s news of a significant slowdown in UK economic growth in the third quarter has left many disappointed. According to data from the Office for National Statistics, UK gross domestic product only increased by 0.1% quarter on quarter in the three months to September, with a 0.1% month-on-month fall in GDP in September.
Economists had predicted a 0.2% growth in the third quarter, based on a 0.5% rise in the second quarter. Hailey Low, an associate economist at the National Institute of Economic and Social Research, attributed the weaker growth figures to pre-Budget uncertainty. She expressed disappointment in the Chancellor for not taking more action to address the UK’s low productivity growth and stimulate economic growth in the long term.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, pointed out that the economy had already started to slow down before the Budget, with weaker business and consumer confidence affecting output, especially in September. He emphasized the need to address challenges related to poor productivity and supply-side constraints for sustainable growth.
Looking ahead, Thiru warned that economic growth in the final quarter of the year is likely to remain modest due to impending tax increases and global uncertainty impacting spending and investment decisions.
On a more positive note, Matt Swannell, chief economic adviser to the EY ITEM Club think tank, mentioned some potential benefits from policy measures in the UK and the US. He highlighted that the Chancellor’s Autumn Budget indicated a less restrictive fiscal policy compared to previous plans, and looser US fiscal policy could provide a slight boost. Despite these factors, tight financial conditions may continue to impact disposable incomes as effects of past interest-rate increases unfold.
Overall, the disappointing GDP figures for the third quarter reflect ongoing challenges facing the UK economy. Addressing issues related to productivity, supply-side constraints, and consumer confidence will be crucial for sustaining economic growth in the long term.
