The UK economy has shown no growth in the third quarter but surpassed the expectations of economists, according to official figures.
Gross domestic product (GDP) – which measures the value of goods and services produced – also showed no growth in the three months from July to September, the Office for National Statistics said.
The economic growth was driven by 0.2 perecent growth in the services sector, with particular strength in professional, scientific and technical activities and in healthcare.
Analysts had predicted a 0.2 percent fall for the quarter and a flat reading for September.
Darren Morgan, ONS director of economic statistics said: “The economy is estimated to have shown no growth in the third quarter.
“Services dropped a little with falls in health, management consultancy and commercial property rentals.
“These were partially offset by growth in engineering, car sales and machinery leasing.”
Experts have warned the GDP’s lack of growth in the three quarters leaves Britain at risk of recession.
While somehow avoiding a recession this year, today’s no growth reading means the UK economy is flatlining with only 0.2 percent economic growth in the last six months – for many the economic pain “has only been delayed”.
Nicholas Hyett, Investment Analyst, Wealth Club: “The UK economy remains surprisingly resilient, with GDP growth beating expectations and still in positive territory despite pressure from higher interest rates, higher input costs and the cost of living squeeze.
Consumers continue to feel significant pain, and there are some technical reasons behind the positive GDP growth. Economic stagnation isn’t pretty long term, but if inflation can be brought under control without pushing the economy into outright recession then that will be no mean feat.”
Lindsay James, investment strategist at Quilter Investors: “GDP figures today confirmed a UK slowdown that has been increasingly signalled by leading indicators in recent months, with cracks having appeared in consumer spending and business activity with a knock-on effect for labour demand. While somehow avoiding a recession this year, today’s no growth reading means the UK economy is flatlining with only 0.2 percent economic growth in the last six months.
“Unfortunately, for many the economic pain has only been delayed. As the Bank of England stated earlier this month that more than half of the impact of higher interest rates on the level of GDP is still to come through, the UK economy faces growing headwinds as we approach 2024.
“Whilst inflation data may soon provide some signs of cooling, uncertainty remains over the direction of energy prices due not only to the risk of the crisis in the Middle East expanding, but also resulting from the ongoing disruption to global gas supplies eventually feeding through to the Energy Price Cap.”
Emma-Lou Montgomery, associate director for Personal Investing at Fidelity International, said “Looking at the broader picture, it means GDP has shown no growth in the three months to September 2023 when compared with the three months to June 2023 – leaving Britain at risk of recession.
She explained that as interest rates remain at 5.25 percent “we’re still in uncertain territory for some time yet” and that won’t be good news for retailers who badly needed the forthcoming festive spending season to be one that boosted the coffers.
These retailers are feeling the pressure ahead of this season hoping to see some growth in sales.
John Lamerton Small Business Author at Big Idea for Small Businesses said: “Tough doesn’t begin to sum it up. Small business owners all over the country are facing a perfect storm of rising costs, falling sales, and higher taxes.
“Unfortunately, the fate of these businesses lies in the hands of politicians more concerned with their own survival ahead of the election next year, than those of the once-famous “nation of shopkeepers”.”
