In fact, the UK economy increased by only 0.1% in the three months to September. This slower-than-expected growth has contributed to worries that our nation’s economic stability is hanging by a thread. This figure represents a drop from earlier quarters. In the first quarter, it was negative 0.7%, and then it fell down to negative 0.3% in the second quarter. According to the most recent data, gross domestic product (GDP) fell by 0.1% in August. This drop reflects that the economy shrank in those months.
Analysts had predicted third quarter growth of 0.2% before these numbers were released. Even the Bank of England’s monetary policy committee went so far as to repeat this forecast. Those disappointing results arrive at a time of dangerous economic upheaval, and as Chancellor Rachel Reeves is set to announce her Autumn Budget in less than two weeks. With economic growth now the top priority of the newly-elected Labour government, these numbers are even more shocking.
Shadow chancellor Rachel Reeves expressed her dissatisfaction over the economic performance growing by a surprising 0.6%. As she put it, “I’m disappointed, growth has not been as strong as I would like.” She pointed out that the economic conditions are even more dire than last year. This only underscores the daunting economic challenges our country is up against.
The Office for National Statistics (ONS) monthly GDP figures were published last week, and the data confirm a worrying trend. The economy stalled over the summer when taking into account population growth, which adds further complexity to an already fragile situation. One of the key drivers behind the minimal growth was a fall in car manufacturers’ output, according to the ONS.
Analysts have noted a drop in the services and construction industries relative to previous months. This growing trend is a symptom of a much larger problem, one that’s affecting every industry. “Strong car registrations and retail sales should boost services, while solid growth in GP appointments and A&E admissions could boost health output,” according to insights from industry experts.
The potential consequences of this economic slow down are severe. If GDP continues to drop for two quarters in a row, that will formally signal the beginning of a recession. Yet this economic downturn leaves many facing pay freezes and layoffs in the public and private sector. This possible thud creates even more strong headwinds for the administration and their goals.
The new Labour government has promised to make sustainable economic growth the absolute bottom line. These new numbers underscore the steep road ahead. “Growth makes us better off and is the government’s number one mission, but these figures are a reminder that there’s a way to go before it can say ‘mission achieved’,” remarked economist Dharshini David.