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Bank of England in the City of London on November 6, 2024 in London, United Kingdom. The City of London is a city, ceremonial county and local government district containing the main central business district of London. The City of London is widely known simply as the City and is also known colloquially as the Square Mile. (photo by Mike Kemp/In Pictures via Getty Images)
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The British economy achieved no growth in the three months to September, revised figures from the UK’s Office for National Statistics showed on Monday.
TO preliminary estimate For the third quarter, published by the ONS last month, it said UK GDP grew by 0.1% during that period. However, final data released on Monday showed 0% GDP growth from the previous quarter.
He british pound It fell slightly against the US dollar on Monday, trading around $1.2566 at 8:37 am London time.
Monday’s figures deal another economic blow to Britain, after a series of weak data hit confidence and raised questions about the newly elected Labor government’s fiscal strategy.
Earlier this monthONS data showed that the UK economy had unexpectedly contracted by 0.1% in October. It was the second consecutive monthly drop in the country’s GDP, after a 0.1% drop. in september.
Looking ahead, Paul Dales, chief UK economist at Capital Economics, said he expects the British economy to have also stagnated in the final quarter of 2024, but his view was not entirely pessimistic.
“Overall, this data suggests that after an excellent first half of the year, the economy stagnated in the second half of the year due to a combination of the persistent drag of higher interest rates, weaker external demand and some concerns on policies in the budget,” he said in a note on Monday.
“Our hunch is that 2025 will be a better year for the economy than 2024. But the latest data suggests the economy doesn’t have much momentum as the year draws to a close.”
Meanwhile, inflation appears to be rising once again. The ONS said last week that UK inflation had risen to 2.6% in November, marking the second consecutive month of price increases.
The Bank of England subsequently maintained its base interest rate. stable at 4.75%. While markets did not expect any change in rates at Thursday’s Monetary Policy Committee (MPC) meeting, there was surprise when three MPC members voted in favor of cutting rates (a Reuters poll had predicted only one member I would vote in favor of the reduction).
While Governor Andrew Bailey has previously marked Four rate cuts could be possible next year, with traders divided over when the Bank of England will resume cutting interest rates. LSEG data shows markets expect another hold at the February MPC meeting, with a slim majority of traders expecting rates to be cut by 25 basis points in March.
It comes after UK Finance Minister Rachel Reeves. at the end of October released the Labor government’s first budget since it replaced the former Conservative government in july.
The budget included plans by Prime Minister Keir Starmer’s government to increase taxes by 40 billion pounds ($50.5 billion). Reeves said at the time that this would be achieved through a series of new policies, including an increase in employer payments into National Insurance (a tax on profits), as well as an increase in capital gains tax and the elimination of fuel payments in winter to pensioners.
Some of the policies have been met with widespread criticism. The increase in the national insurance payroll tax, for example, has caused warnings of the companies that will be least likely to hire new workers, with a report from recruitment site Indeed earlier this month suggesting the policy had already affected British job offers.
