The UK's economy has faced a standstill, recording zero growth in the third quarter of 2024, according to the latest official figures released by the Office of National Statistics (ONS). The stagnation period, spanning from July to September, follows a brief recession at the end of 2023 when the economy contracted in two consecutive quarters. This recent economic data raises concerns as it coincides with the Organisation for Economic Co-operation and Development (OECD) downgrading its growth forecast for the UK economy.
The OECD has revised its growth expectations for the UK down to 0.9% for the entirety of 2024, a decrease from its earlier prediction of 1.1%. This adjustment reflects broader uncertainties in the economy and highlights challenges that persist despite a rebound in the first half of the year. Between January and March 2024, the UK's GDP rose by 0.7%, followed by an additional growth of 0.5% from April to June.
However, the positive momentum did not carry into the third quarter. The ONS reported that GDP per capita also fell by 0.1% during this period, indicating that the economic recovery is not benefiting individuals uniformly. The lack of growth in GDP during this quarter raises questions about future economic stability, especially as two consecutive quarters of zero growth would officially denote a recession.
The economic landscape has become even muddier following a contraction of 0.1% in GDP observed in October 2024. Analysts and policymakers are closely monitoring these indicators, as they may influence future fiscal and monetary policies. The ONS, which provides one of the quickest GDP estimates among major economies—approximately 40 days post-quarter—continues to release monthly updates on economic performance, offering insights into the ever-changing financial climate.
Historically, the UK economy has experienced significant turbulence. A notable recession occurred in 2020 due to the Covid-19 pandemic, which led the government to implement extensive borrowing measures to support businesses and households. This intervention was crucial in mitigating immediate fallout but has left a lasting impact on public finances and overall economic health.
The ONS calculates GDP using a comprehensive approach that incorporates output, income, and expenditure. This methodology aims to provide a holistic view of economic activity and is fundamental for understanding underlying trends. Despite earlier positive indicators in early 2024, the recent data underscores persistent vulnerabilities within the economy.
The OECD's revised forecast serves as a cautionary reminder of the challenges that lie ahead. Economists suggest that external factors, including global supply chain disruptions and inflationary pressures, continue to pose risks to sustained growth in the UK. As businesses adapt to changing market conditions, it remains crucial for policymakers to implement strategies that foster resilience and innovation.