One major takeaway is that the United Kingdom is facing another bout of slower economic growth. This worrying trend looks highly unsustainable financially, as the government prepares for the next Budget. Yet in the middle of these rumbles, the UK economy produced a shockingly low growth number of just 0.1% for the July-to-September quarter, coming in well beneath expectations. This slowdown is evident as the economy experienced a contraction in September, prompting discussions about the challenges ahead.
Even accounting for this recent drop, the UK might still end the year as the second-fastest growing G7 economy. Analysts still raise alarm bells that a major fiscal cliff looms large over the country that must be climbed. Decades of economic distress and intersecting crises, from the pandemic to racial inequity to climate change, have created a scarred economy. Severe regulatory uncertainty about government policy has exacerbated these challenges.
… consumer behavior is just as important a part of today’s economic reality. Though UK consumers have carried high savings into the current climate, their spending has not kept up with that of their American counterparts. Without more consumer spending, overall economic recovery and growth in the future would be put at risk. After UK economy had earlier this year beaten expectations, especially in a stronger first half,
As the government gets ready to unveil its flagship Budget, it is under considerable pressure to do so. It needs to provide certainty and increase confidence for consumers and businesses alike. The recent fall in government borrowing costs on the markets offers a rare chance for policymakers to seize. The current two- and five-year rates are now lower than what the last Labour government inherited on entering office. This unprecedented reversal signals a good time to borrow.
As economists warn, the decades-long trend of anemic growth needs to be reversed for any recovery to be lasting and widely felt. The upcoming Budget will be perhaps the most significant UK-wide event of 2020 in deciding if the UK can reverse its fortunes. The fiscal gap The government’s approach must address the fiscal gap. More importantly, perhaps, it has to restore consumer and business confidence — that magic elixir so forever important to re-invigorating the economy.