The Bank of England in the City of London on November 6, 2024 in London, UK. The City of London is a ceremonial county and local government district that includes London’s main business district. The City of London is widely spread, as the City is also known as the Square Mile. (Photo by Mike Kemp/In Pictures via Getty Images)
Mike Kemp | In the pictures | Getty Images
The UK economy grew less than expected in the third quarter of the year, showing only marginal growth after a rebound earlier this year, initial data showed on Friday.
Gross domestic product was 0.1% in the three months to September, compared to the previous quarter. That was below the 0.2% growth expected by economists polled by Reuters, and followed a 0.5% expansion in the second quarter of the year.
The UK’s main services sector also grew by just 0.1% in the quarter, the Office for National Statistics said. Construction rose by 0.8%, while production fell by 0.2% in the month.
It comes after UK inflation it dropped significantly to 1.7% In September, it fell below the Bank of England’s 2% target for the first time since April 2021. The drop in inflation paved the way for the central bank to cut rates. 25 basic points on November 7, taking its key rate to 4.75%.
The Bank of England said last week that it expects the Labor government’s tax hike budget to boost GDP by 0.75 percentage points within a year. Policymakers also noted that the government’s fiscal plan led to an increase in inflation expectations.
UK Finance Minister Rachel Reeves said on Friday she was “not satisfied” with the numbers.
“In my Budget, I took the hard choices to fix the foundations and stabilize our public finances. Now we will deliver growth through investment and reform to create more jobs and more money in people’s pockets, to get the NHS back on track. Rebuild the UK and secure our borders in a decade of national renewal.” , he said in a statement.
A rate cut at the BOE’s next meeting in December now looks “unlikely”, according to Suren Thiru, director of economics at the Institute of Chartered Accountants in England and Wales. Inflationary risks and growing global headwinds will prevent policymakers from pursuing rate cuts, he said.
“These figures suggest that the economy boiled over ahead of the budget, as weaker business and consumer confidence helped weaken output during the third quarter, particularly in September,” Thiru said in emailed comments.
The results of the recent US election have created considerable uncertainty about the global economic impact of another term in office for President-elect Donald Trump. While Trump’s proposed tariffs are expected very inflationary and It hit the European economy hardsome analysts have said such measures can provide options For the British economy.
Bank of England Governor Andrew Bailey offered little last week about the bank’s views on Trump’s tariff agenda, but did mention the risks of global divisiveness.
“Let’s wait and see where things go. I’m not going to prejudge what might happen, what might not happen,” he told reporters at a press conference.
The British pound It was up a slight 0.1% against the US dollar at 7:33 a.m. in London. It fell 0.15% against the euro after Friday’s GDP release.
