UK economy suffers its worst quarter for more than a decade
THE UK’s economy has suffered its worst three months for more than a decade after official figures revealed output failed to grow once again in October.
The Office for National Statistics (ONS) said the economy saw zero growth month-on-month in October, following two months of declining gross domestic product (GDP).
It comes after the Ulster Bank purchasing managers’ index for November reported that output and new orders at Northern Ireland companies hit a seven-year low during the month.
The ONS’ GDP report marks the first time the economy has failed to grow for three months in a row since early 2009 amid the recession following the financial crisis.
The ONS data also showed the economy grew by just 0.7% yearon-year in October — the worst such performance since June 2012.
And on a rolling three-month basis — seen as less volatile than the monthly data — the ONS said growth also stagnated in October, down from 0.3% growth between July and September.
It offers a weak backdrop for the economy ahead of tomorrow’s general election day and also sees a dismal start for the final quarter of 2019.
Labour and the Liberal Democrats were quick to pounce on the figures, blaming the Conservatives for the economy’s woes.
Economists said the economy was in danger of stagnating in the fourth quarter and looked likely to undershoot the Bank of England’s expectations for 0.2% growth.
Jack Leslie, economic analyst at the Resolution Foundation, said: “The United Kingdom’s economy has slowed from a crawl to a halt over the course of 2019.
“Crucially the UK’s domestic challenges come against a weak global economic outlook for next year.
“While the main parties have avoided any discussion of this challenging economic environment during the election campaign, navigating it will be a central task for the next Government nonetheless.”
The pound shrugged off the poor GDP figures as the City appeared to bet on a Conservative win on Thursday, with sterling up 0.3% at 1.318 US dollars and 0.2% higher at 1.189 euros.
But the FTSE 100 Index was nearly 1% lower, down 71.8 points at 7162.2.
The ONS data showed growth was hit by a poor performance in the construction sector, which saw output fall 2.3% month-onmonth in October, while manufacturing also suffered a tough month amid Brexit and political uncertainty.
An ONS spokesman said: “There were increases across the services sector, offset by falls in manufacturing with factories continuing the weak performance seen since April.
“Construction also declined across the last three months with a notable drop in housebuilding and infrastructure in October.”
There were also disappointing official trade figures out on Tuesday, showing the deficit in goods and services widened to a seven-month high of £5.2 billion in October from £1.9 billion in September.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the stockpiling of exports ahead of the original October 31 deadline for Brexit had “triggered another shortterm surge in imports, prompting the overall trade deficit to balloon”.
According to the Ulster Bank purchasing managers’ index, the business activity index dropped to 42.3 in November from 44.9 in October.
Output has now fallen in each of the past nine months, with the rate of contraction accelerating to the fastest for seven years.
Brexit uncertainty was the main factor leading to the decline, according to respondents who indicated a wariness among customers to commit to new projects.