The latest gross domestic product (GDP) estimates have been revised downwards.
The UK economy showed no growth between July and September (Q3), according to the updated figures from the Office for National Statistics (ONS).
In an unexpected downgrade, the official statistics showed zero growth in Q3 2024, below an initial estimate of 0.1% made last month. Growth in the second quarter was also downgraded from 0.5% to 0.4%. The UK will technically be in recession if GDP falls for two successive quarters.
Early estimates show that real GDP per head fell by 0.2% in the third quarter of 2024 and is 0.2% lower compared with the same quarter a year ago.
Liz McKeown, the ONS’ director of economic statistics, said: “The economy was weaker in the second and third quarters of this year than our initial estimates suggested, with bars and restaurants, legal firms and advertising, in particular, performing less well.
“The household saving ratio fell a little in the latest period, though remains relatively high by historic[al] standards. Meanwhile, real household disposable income per head showed no growth.”
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’15 years of neglect’
Rachel Reeves, Chancellor of the Exchequer, said: “The challenge we face to fix our economy and properly fund our public finances after 15 years of neglect is huge.
“But this is only fuelling our fire to deliver for working people. The Budget and our Plan for Change will deliver sustainable long-term growth, putting more money in people’s pockets through increased investment and relentless reform.”
The disappointing figures come as business groups warn that activity is set to fall at the start of the new year. Private sector firms expect activity to fall in the three months to March (weighted balance of negative 24%), according to the Confederation of British Industry’s (CBI’s) latest growth indicator. Expectations are now at their weakest in more than two years.
Alpesh Paleja, CBI’s interim deputy chief economist, said: “There is little festive cheer in our latest surveys, which suggest that the economy is headed for the worst of all worlds – firms expect to reduce both output and hiring, and price growth expectations are getting firmer. Businesses continue to cite the impact of measures announced in the Budget – particularly the rise in employer NICs – exacerbating an already tepid demand environment.
“As we head into 2025, firms are looking to the government to boost confidence and to give them a reason to invest, whether that’s long-overdue moves to reform the apprenticeship levy, supporting the health of the workforce through increased occupational health incentives or a reform of business rates.
“In the longer term, businesses will be looking to the industrial strategy to provide the stability and certainty [that] can unlock innovation and investment – and provide that much-needed growth for the economy, which can deliver prosperity for firms and households alike.”
This article was first published on Mortgage Solutions‘ sister site, YourMoney.com. Read: Recession warning as UK economy flatlines
