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The UK economy barely grew in the third quarter of 2024, registering a meagre 0.1% increase, according to the Office for National Statistics (ONS).
This marks a significant slowdown from the 0.5% growth seen in the previous quarter and places the UK sixth in the G7 growth league.
The ONS attributed the sluggish performance to a decline in manufacturing output and a contraction in the IT sector. These factors offset a rise in car sales. Economists had predicted stronger growth of 0.2%.
Matt Swannell, Chief Economic Advisor to the EY ITEM Club, said: “September’s outturn meant quarter-on-quarter GDP growth slowed to just 0.1% in Q3, from 0.5% in Q2. However, the first cut of the expenditure data was more reassuring, with strong contributions from household consumption, investment and government spending.
“Looking ahead, the EY ITEM Club expects the economy to grow at a solid, albeit unspectacular pace in 2025, but this is likely to mask some offsetting forces. Measures announced in the Chancellor’s Autumn Budget suggest fiscal policy will be less restrictive than under the previous government’s plans, while the effects from looser US fiscal policy should also act as a modest tailwind.
“Firm real income growth, together with some dis-saving, should support stronger consumer spending to an extent. However, tight financial conditions will continue to weigh on disposable incomes as the lagged impact of past interest rate rises continues to emerge.”
Kevin Brown, savings specialist at Scottish Friendly, shared a cautiously positive outlook, saying: “This is modestly positive news although the figures reflect how the economy was doing before the Budget announcements at the end of October. The big question now is whether this growth is still sustainable.
“Rate setters will be confident that cutting rates is still the right move with inflation tamed, and the labour market showing some, admittedly small, signs of loosening. Ongoing rate cuts will make debt costs easier to bear for families and businesses alike.
“Now more than ever households need to be setting aside, if possible, rainy-day funds to cover any unexpected costs, or even to prepare for issues such as job losses. Those on lower incomes should consider schemes such as Help to Save which was extended in the Budget.”