The Bank of England established the City of London on November 6, 2024 in London, England. The City of London is a city, ceremonial shire and local government area containing London’s main central business district (CBD). The City of London is widely known simply as “The City” and colloquially as “The Square Mile”. (Photo by Mike Camp/Getty Images)
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Preliminary data showed on Friday that the British economy grew less than expected in the third quarter of this year, showing only marginal growth after rebounding at the beginning of the year.
In the three months to September, gross domestic product grew 0.1% from the previous quarter. That was lower than the 0.2% growth expected by economists polled by Reuters, after the economy grew 0.5% in the second quarter.
The Office for National Statistics said that the UK-led services sector also grew by only 0.1% this quarter. Construction grew 0.8% this month, while production fell 0.2%.
Previously, British inflation fell sharply to 1.7% in September, falling below the Bank of England’s 2% target for the first time since April 2021. to 4.75%.
The Bank of England said last week it expected the Labor government’s tax increase budget to boost GDP by 0.75 percentage points within a year. Policymakers also pointed to the government’s fiscal plans leading to upward revisions to inflation forecasts.
British Finance Minister Rachel Reeves said on Friday she was “not satisfied” with the figures.
“In my budget, I made tough choices to repair the foundations and stabilize our public finances. Now we will grow through investment and reform, creating more jobs and putting more money in people’s pockets, Putting the NHS back on its feet, rebuilding Britain and securing our borders in a decade of national recovery,” she said in a press release.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said the possibility of a rate cut at the Bank of England’s next meeting in December now looks “unlikely”. Inflation risks and growing global headwinds could prevent policymakers from cutting interest rates in a row, he said.
“These data suggest that the economy was already spinning out of control even before the Budget, as weak business and consumer confidence led to weaker output in the third quarter, particularly in September,” Thiru said in emailed comments.
The results of the recent US election have brought great uncertainty to the impact of President-elect Trump’s re-election on the global economy. While Trump’s proposed tariffs are expected to stoke widespread inflation and hit the European economy hard, some analysts say such measures could provide an opportunity for the British economy.
Bank of England Governor Andrew Bailey last week revealed little about the bank’s views on Trump’s tariff agenda, but he did mention the risk of global fragmentation.
“Let’s wait and see where things go. I’m not going to prejudge what may or may not happen,” he told reporters at a news conference.
this GBP It edged up 0.1% against the dollar at 7:33 a.m. in London. EUR/EUR fell 0.15% after Friday’s GDP release.
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