UK GDP stalls as ONS warns of ‘slowing economic growth’ after lacklustre performance | Personal Finance | Finance
UK GDP by 0.2 percent in the three months to August after showing no growth in July, the Office of National Statistics (ONS) has said.
An ONS spokesperson said the broader picture is one of “slowing growth” in recent months
The services sector was the main contributor to growth, up 0.1 percent in August after a similar rise in July. Meanwhile, the smaller production sector swung to 0.5 percent growth after a 0.7 percent contraction in July, revised from a 0.8 percent estimate in last month’s figures.
Construction output grew by 0.4 percent in August, following an unrevised fall of 0.4 percent in July, and increased by one percent in the three months to August 2024.
Gross domestic product (GDP) measures the value of goods and services produced in the UK. It’s used to estimate the size and growth of the economy.
Commenting on the figures, Liz McKeown, director of economic statistics at ONS said: “All main sectors of the economy grew in August, but the broader picture is one of slowing growth in recent months, compared to the first half of the year.”
Ms McKeown continued: “In August, accountancy, retail, and many manufacturers had strong months, while construction also recovered from July’s contraction. These were partially offset by falls in wholesaling and oil extraction.”
Chancellor Rachel Reeves described the figures as “welcome news”. She said: “Growing the economy is the number one priority of this Government so we can fix the NHS, rebuild Britain and make working people better off.
“While change will not happen overnight, we are not wasting any time on delivering on the promise of change. Next week, hundreds of the world’s biggest businesses will come to Britain as we deliver on our promise to bring investment, growth and jobs back to every part of the country.”
The data reflects the UK’s ongoing recovery from the recession experienced at the end of last year.
A technical recession is characterised by two successive quarters of negative growth. The first quarter GDP growth remained unchanged at 0.7 percent, signalling the conclusion of the brief recession.
While only a small increase, Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, noted: “August’s 0.2 percent expansion is likely to be comforting for the new Government as it looks towards its first Budget on October 30 when Chancellor Rachel Reeves is expected to deliver a raft of ‘painful’ tax rises.
“The positive growth figure may even help to quell the Government’s doom-mongering about the state of the country’s finances, something that has had a detrimental effect on business and consumer confidence in recent weeks.”
Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, commented: “Today’s update showed a mixed bag of results across sectors. The service sector continues to deliver solid output, being the strongest economic driver after buoyant retail sales and the conclusion of healthcare strike action. Elsewhere and encouragingly, manufacturing and construction have rebounded after a weak July, contributing to the month’s activity revival.”
He added that today’s results may also “reassure” the Bank of England’s rate-setters, proving that the previously prolonged period of high rates did not derail economic activity, even as inflationary pressures diminished.
Mr Batstone-Carr continued: “The Monetary Policy Committee will now have its sights set on the Budget announcement, as well as the evolution of price and wage pressures, to help inform next month’s rate decision.”
