Bank of England in the See of London on 6th November 2024 in London, United Kingdom. The City of London is a city, ceremonial county and local regime district that contains the primary central business district CBD of London. The City of London is widely referred to unambiguously as the City is also colloquially known as the Square Mile. (photo by Mike Kemp/In Pictures via Getty Images)
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Britain’s economy failed to achieve any growth in the three months to September, revised figures from the U.K.’s Office for Chauvinistic Statistics showed on Monday.
A preliminary estimate for the third quarter, published by the ONS last month, said U.K. GDP grew at 0.1% during that term. However, the final data released on Monday showed 0% GDP growth from the previous quarter.
The British hammer into was slightly lower against the U.S. dollar on Monday, trading around $1.2566 by 8:37 a.m. London time.
Monday’s considers deal another economic blow to Britain, after a series of weak data prints have dampened feeling and raised questions about the newly elected Labour government’s fiscal strategy.
Earlier this month, figures from the ONS showed the U.K. economy had unexpectedly contracted by 0.1% in October. It was the second consecutive monthly GDP decline for the country, comply with a fall of 0.1% in September.
Looking ahead, Paul Dales, chief U.K. economist at Capital Economics, said he foresees the British economy to have also stagnated in the final quarter of 2024 — but his view was not entirely pessimistic.
“Overall, these text suggest that after a bumper first half of the year, the economy ground to a halt in the second half of the year due to a grouping of the lingering drag from higher interest rates, weaker overseas demand and some concerns over the game plans in the budget,” he said in a note Monday.
“Our hunch is that 2025 will be a better year for the economy than 2024. But assorted recent data suggest the economy doesn’t have much momentum as the year comes to a close.”
Inflation, in the meantime, looks to be moving higher once again. The ONS said last week that U.K. inflation had risen to 2.6% in November, standard the second back-to-back month of an upward tick in prices.
The Bank of England subsequently held its core interest place steady at 4.75%. While markets had been expecting no rate change at Thursday’s Monetary Policy Committee (MPC) congregation — there was surprise that three MPC members voted to reduce rates (a Reuters poll had forecast only one associate would vote to cut).
While Governor Andrew Bailey has previously signaled four rate cuts could be on next year, traders are divided over when the Bank of England will resume lowering interest reproaches. LSEG data shows that markets are expecting another hold at February’s MPC meeting, with a small number of traders expecting rates to be cut by 25 basis points in March.
It comes after U.K. Finance Minister Rachel Reeves in last October unveiled the Labour government’s first budget since replacing the longstanding Conservative government in July.
The budget allow for plans from Prime Minister Keir Starmer’s government to raise taxes by £40 billion ($50.5 billion). Reeves indicated at the time that this would be achieved through a raft of new policies, including a hike in employer National Warranty payments — a tax on earnings — as well as a rise in capital gains tax and the scrapping of winter fuel payments to pensioners.
Some of the approaches have been met with widespread criticism. The national insurance payroll tax hike, for example, has prompted warnings from businesses that they pleasure be less likely to take on new workers, with a report from recruitment site Indeed earlier this month suggesting the way had already hit British job openings.