UK economy failed to grow in third quarter of 2024

The UK economy flatlined in the third quarter of the year, according to revised official figures.

The Office for National Statistics said that UK gross domestic product (GDP) showed no growth between July and September, in the run up to the Autumn budget.

Statisticians, who had previously estimated 0.1% growth for the quarter, partly blamed the reduction on fresh survey data showing weaker trading across bars and restaurants.

The ONS also revised down its growth reading for the second quarter of 2024, to 0.4%. In September, it said it thought GDP had increased by 0.5%, which was itself a reduction on previous estimates.

The downbeat economic readings provide a blow to Chancellor Rachel Reeves and the Government’s hopes to grow the economy rapidly.

Ms Reeves promised to turbocharge economic growth after Labour won the July election but has now seen the economy stall over the three months to September, while official figures earlier this month also pointed towards a 0.1% decline in October.

Monday’s downward revision was partly linked to a weaker performance across the important services industry.

Services output failed to grow over the third quarter of the year, revised down from a previous estimate of 0.1%.

This came after experts said consumer-facing services firms only saw 0.1% growth, down from a previous reading of 0.5%.

It said this came after bars and restaurants, and legal services firms recorded a weaker than previously expected performance.

The ONS also said the production sector saw slightly weaker growth than previously thought, on the back of a downgrade for manufacturing firms.

ONS director of economic statistics Liz McKeown 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 standards.

“Meanwhile, real household disposable income per head showed no growth.”

Chancellor Rachel Reeves 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.”

Philip Shaw, chief economist at Investec, said: “The main point is the further indication of a loss of traction in the economy, after a buoyant first half of 2024.

“This follows recent news that GDP shrank in both September and October and will probably leave the UK only just escaping a technical recession in Q3 and Q4.

“The better news is that it will make the MPC (Bank of England’s monetary policy committee) more inclined to bring interest rates down early next year, especially as it was dismissive of last week’s strong earnings data for October.”