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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The UK economy failed to register any growth in the three months to September. Revised figures Figures released by the Office for National Statistics on Monday.
Preliminary estimates for the third quarter released by the Office for National Statistics last month said that UK GDP grew by 0.1% during the same period. However, final data released on Monday showed that GDP increased by 0% quarterly.
this GBP It was slightly lower against the U.S. dollar on Monday, trading around $1.2566 as of 8:37 a.m. London time.
Monday’s data dealt another blow to the British economy after a series of weak data dampened sentiment and raised questions about the newly elected Labor government’s fiscal strategy.
Earlier this month, data from the Office for National Statistics showed that the British economy unexpectedly shrank by 0.1% in October. This is the second consecutive month of decline in the country’s GDP after falling by 0.1%. September.
Looking ahead, Capital Economics chief UK economist Paul Dales said he expected the UK economy to stall in the final quarter of 2024 as well, but his view was not entirely pessimistic.
“Overall, the data suggest that, after a bumper first half, the economy stalled in the second half, weighed down by rising interest rates, weak overseas demand and some concerns about growth policies in the budget,” he said in a report on Monday.
“Our hunch is that the economy will be better in 2025 than in 2024. But recent data suggests that the economy doesn’t have much momentum as we head into the end of the year.”
Meanwhile, inflation appears to be heading higher again. The Office for National Statistics said last week that Britain’s inflation rate had risen to 2.6% in November, marking the second consecutive month of rising prices.
The Bank of England subsequently held its core interest rate steady at 4.75%. While markets had expected no rate change at Thursday’s Monetary Policy Committee (MPC) meeting, in a surprise move, three MPC members voted for a rate cut (a Reuters poll expected just one member to vote for it interest rate cut).
Traders are divided over when the Bank of England will resume rate cuts, although Governor Andrew Bailey has previously suggested four rate cuts are possible next year. LSEG data shows that the market expects the MPC meeting in February to remain on hold again, with a few traders expecting a 25 basis point interest rate cut in March.
Previously, British Finance Minister Rachel Reeves (Rachel Reeves) announced at the end of October the first budget of the Labor government since replacing the long-term Conservative government in July.
The budget includes plans by Prime Minister Keir Starmer’s government to raise taxes by 40 billion pounds ($50.5 billion). Reeves said at the time that this would be achieved through a series of new policies, including an increase in employer national insurance contributions, a form of income tax, as well as increases in capital gains tax and Eliminate winter fuel charges to pensioners.
Some policies have been widely criticized. For example, a rise in National Insurance payroll tax prompted businesses to warn they would be less likely to hire new staff, and a report from recruitment website Indeed earlier this month suggested the policy was already impacting job vacancies in the UK.
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