Economy stagnates but defies forecasts

THE UK economy stagnated over the latest quarter but surpassed economists’ expectations, according to official figures.

Gross domestic product (GDP) which measures the value of goods and services produced - showed no growth in the three months from July to September, the Office for National Statistics (ONS) said.

It comes a week after the Bank of England warned that the UK could face zero growth until 2025 but is likely to still avoid a recession.

Analysts had predicted a 0.2% fall for the quarter and a flat reading for September.

The statistics body reported 0.2% growth in the economy for the month of September, amid a boost from the film production, health and education industries.

The ONS also revised down growth in August to 0.1%, from 0.2%, and reported a 0.6% decline for July.

Economists said the manufacturing and construction sectors particularly helped to support growth over the end of the quarter.

ONS director of economic statistics Darren Morgan 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.”

Economists said after the latest figures that the UK looks likely to avoid a recession despite concerns over the impact of recent significant interest hikes taken by the Bank of England in a bid to quash inflation.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The economy narrowly avoided contracting in Q3, and we continue to think that it can maintain this resilient performance in Q4.

“We continue to think that the chances of a recession look low; we look for a 0.3% quarter-on-quarter increase in GDP in Q4 and expect that pace to be broadly maintained next year.”

Chancellor Jeremy Hunt said: “High inflation is the single greatest barrier to economic growth. The best way to sustainably grow our economy right now is stick to our plan and knock inflation on its head.

“The Autumn Statement will focus on how we get the economy growing healthily again by unlocking investment, getting people back into work and reforming our public services so we can deliver the growth our country needs.”

Shadow chancellor Rachel Reeves said: “These figures are further evidence that the economy is not working under the Conservatives and working people are worse off.”

We continue to think that the chances of a recession look low SAMUEL TOMBS