The UK economy has hit a standstill in the third quarter, with revised official figures showing zero growth between July and September. This stagnation poses significant challenges for the government and businesses alike.
UK Economy Records Stagnant Period in Third Quarter
The UK economy experienced zero growth between July and September, according to revised official figures. This downward revision is a significant blow to the economy, indicating a weaker performance than initially thought.
Economic Performance Weaker Than Estimated
The initial estimate of 0.1% growth has been revised down to zero, showing that the economy’s performance was weaker than expected. This stagnation in economic growth poses significant challenges for the government and businesses alike.
Chancellor’s Commitment to Sustainable Growth
Chancellor Rachel Reeves acknowledged the challenges facing the economy, stating that “after 15 years of neglect, the challenge to fix the economy is huge.” She emphasized that October’s Budget would deliver sustainable long-term growth and put more money in people’s pockets. However, business groups have expressed concerns about the government’s measures.
Business Groups Warn of Economic Downturn
The CBI warned that its latest company survey suggests “the economy is headed for the worst of all worlds.” The survey revealed that companies expect to reduce both output and hiring, and raise prices due to tax rises. Firms have also expressed concerns about the impact of measures announced in October’s Budget on their businesses.
Rising Inflation and Interest Rates
Inflation is rising at its fastest pace since March, with separate figures showing a significant increase. The Bank of England voted to hold interest rates, citing a worse-than-expected economic performance, with no growth between October and December. Firms have warned that measures announced in the Budget could push them into raising prices and reducing new jobs.
Private Sector Businesses Expect Steep Decline
The CBI’s survey revealed that private sector businesses across all industries expect a “steep decline in activity” in the first three months of 2025. Alpesh Paleja, the CBI’s interim deputy chief economist, stated that expectations are now at their weakest in over two years.
Real Household Disposable Income
The ONS revised down growth figures for April to June to 0.4% from 0.5%. The economy was weaker than initially estimated due to poor performance in sectors such as bars and restaurants, legal firms, and advertising firms. Real household disposable income per head showed no growth.
Economic Outlook
The UK economy’s stagnation and rising inflation pose significant challenges for the government. The CBI has called on the government to boost confidence and give businesses a reason to invest. As the economy heads into 2025, firms are looking to the government to address their concerns and provide a stable economic environment.
