Rachel Reeves ‘not satisfied’ with summer time season slowdown as UK slips down G7 progress leaderboard – enterprise keep | Business

The Resolution Foundation have calculated that the UK has fallen behind the US for progress thus far this yr.

They make clear that the UK had the quickest rising monetary system inside the G7 inside the first half of this yr, after rising by 1.2% from January to June.

But Britain’s GDP rebound has now “run out of steam”, with instantly’s data displaying GDP slowing to 0.1% inside the third quarter of 2024 (certainly one of many weakest prices all through the G7, as outlined proper right here).

Resolution say this slowdown locations UK progress over the first three quarters of the yr at 1.3%, behind the US (1.9%) nonetheless ahead of France and Italy (0.8% and 0.4%), with Canada set to stay merely behind the UK based totally on current forecasts.

Simon Pittaway, senior economist on the Resolution Foundation, says:

“After bouncing once more from recession earlier this yr, Britain’s restoration is already understanding of steam. The UK has fallen underneath the US on the excessive of the G7 GDP progress leaderboard, with progress slowing, wage rises shrinking and employment starting to fall.

“The UK has been a GDP rollercoaster over the earlier 12 months, nonetheless its medium-term effectivity has been staid and stagnant. Over the earlier 5 years, the monetary system has shrunk by 0.7 per cent whenever you account for inhabitants progress.

“This all serves to highlight that the Government’s mission to renew strong economic growth is both extremely hard, and absolutely necessary.”

Economist specialists are in broad settlement that worth vary uncertainty hurt progress over the summer time season.

Hailey Low, affiliate economist on the National Institute of Economic and Social Research (NIESR), says:

“Today’s Q3 GDP figures, though a lot much less sturdy than inside the first half of the yr, mirror the have an effect on of pre-budget uncertainty.

More notably, it’s disappointing that the Chancellor didn’t completely leverage her landmark worth vary remaining month to introduce measures addressing the UK’s low productiveness progress, tackling progress inertia, and stimulating long-term monetary progress.”

Lindsay James, funding strategist at Quilter Investors, blamed ‘gloomy messaging’ from the federal authorities inside the run-up to the worth vary:

“With the worth vary now firmly inside the rearview mirror and the Chancellor reinvigorating her message of progress with the Mansion House speech, instantly’s quarterly GDP figures highlight the malaise the UK nonetheless finds itself in. Despite good momentum early this yr, progress has stumbled as quickly as as soon as extra, rising merely 0.1% over the previous three months, with September actually seeing a contraction.

Much of this will have been on account of the gloomy messaging that was persistent inside the run as a lot as the worth vary, inflicting clients and corporations to pause spending and await what ache was to return.

Here’s Jeremy Batstone-Carr, European strategist at Raymond James Investment Services:

“This morning’s data confirms that the tempo of UK monetary development slowed inside the run-up to Rachel Reeves’ inaugural Budget. As clients and corporations waited to hearken to the Government’s fiscal protection plans, monetary train decelerated, although to not a halt. Despite weak level in authorities spending and commerce, buoyancy in consumer spending was satisfactory to develop the monetary system by 0.2% inside the third quarter of this yr.

Chancellor Rachel Reeves says she is “not satisfied” with instantly’s GDP figures displaying the monetary system slowed over the summer time season.

Reeves says:

“Improving monetary progress is on the coronary coronary heart of each half I’m searching for to comprehend, which is why I’m not glad with these numbers.

“At my Budget, I took the powerful picks to restore the foundations and stabilise our public funds.

“Now we are going to deliver growth through investment and reform to create more jobs and more money in people’s pockets, get the NHS back on its feet, rebuild Britain and secure our borders in a decade of national renewal.”

Today’s GDP report displays that the UK is sitting in path of the underside of the G7 for progress over the summer time season.

Here’s how the lacklustre progress of merely 0.1% remaining quarter compares with completely different major economies:

Labour have pledged to ship the “highest sustained growth in the G7”; instantly’s data displays a great deal of progress is required…..

Luke Bartholomew, deputy chief economist at funding group abrdn, moreover components the finger on the worth vary:

“The economy was always going to slow from the famously “gangbusters” tempo of the first half of this yr, nonetheless the extent of the slowdown is a bit more pronounced than anticipated.

With train progress in September being reported as notably weak, it’s plausible that a number of of slowing is the outcomes of elevated uncertainty for the time being, as firms and households speculated about doable tax modifications ahead of the Budget. That acknowledged, it’s additionally doable that this merely represents common month-to-month volatility fairly than one thing further elementary.

In any regard, the contents of the Budget ended up significantly boosting the enlargement and inflation picture for 2025, and so in that context these data will most definitely do little to differ the pondering on the Bank of England. We proceed to anticipate extra gradual easing, with the next cost scale back coming early subsequent yr.”

The CBI are blaming the uncertainty spherical remaining month’s worth vary for the slowdown in progress over the summer time season.

Ben Jones, CBI Lead Economist says:

“The UK monetary system stalled over the third quarter. Uncertainty ahead of the Budget most definitely carried out an infinite half, with firms extensively reporting a slow-down in dedication making. Hopefully this will present to be a blip. We nonetheless anticipate the monetary system to return to a path of modest progress inside the yr ahead. But draw again risks to the outlook have elevated.

“The Budget has set off warning lights for enterprise. The hike in National Insurance Contributions alongside completely different will improve to employers’ worth base will add to the burden on enterprise. And it’s anticipated to set off a further cautious methodology to pay, hiring and funding as companies work by what it means for his or her very personal budgets.

Here’s a chart displaying how the UK monetary system fared over the previous quarter – shrinking inside the second half of ultimate yr, sooner than returning to progress in 2024:

ONS Director of Economic Statistics Liz McKeown says:

“The financial system grew a little bit within the newest quarter general because the latest slowdown in development continued. Retail and new building work each carried out nicely, partially offset by falls in telecommunications and wholesale. Generally, development was subdued throughout most industries within the newest quarter.

“In September the economy shrank a little. Services showed no growth with a notable increase in car sales offset by a slow month for IT companies. Production fell overall, driven by manufacturing, though there was an increase in oil and gas extraction.”

The UK monetary system ended the summer time season on a weak remember, with GDP contracting in September.

Today’s GDP report displays that month-to-month precise GDP is estimated to have fallen by 0.1% in September.

This was largely as a consequence of declines in manufacturing output and information and communication corporations, the ONS says.

While the businesses sector stagnated in September, manufacturing output fell by 0.5% inside the month, nonetheless constructing output grew by 0.1%.

Disappointingly, the monetary system actually contracted inside the remaining quarter whenever you regulate for inhabitants modifications.

Real GDP per head is estimated to have fallen by 0.1% inside the third quarter of 2024, and is flat, in distinction with the an identical quarter a yr up to now, the ONS says.

That’s one indicator for a country’s dwelling customary.

Newsflash: the UK monetary system has suffered a summer time season slowdown.

GDP rose by merely 0.1% inside the July-September quarter, data merely launched by the Office for National Statistics displays.

That’s down from the 0.5% progress inside the second quarter of the yr, and weaker than the 0.2% anticipated.

The scorecard for the Labour govenment’s first quarter in office displays that the businesses sector grew by 0.1%, whereas constructing grew 0.8%.. nonetheless manufacturing fell by 0.2% inside the quarter.

We’ve moreover found in a single day that Japan’s monetary system slowed over the summer time season.

Japan’s GDP rose by merely over 0.2% in July-September, consistent with new authorities data that displays the monetary system grew at an annualised cost of 0.9% in Q3.

That’s a slowdown on Q2, when Japan’s monetary system grew by spherical 0.55%.

Although household spending held up inside the remaining quarter, there was a dip in capital spending as firms held once more from funding picks. Net commerce moreover had a detrimental have an effect on on progress.

Bank of England governor says Brexit has undermined UK monetary system

Heather Stewart

Brexit has moreover been holding once more the UK monetary system, the Bank of England governor warned remaining night as he urged ministers to “rebuild relations” with the EU.

Speaking on the Mansion House dinner inside the City of London on Thursday night time, Andrew Bailey acknowledged he took no place on Brexit “per se”, nonetheless added: “I do have to point out consequences.”

He acknowledged Brexit had “weighed” on the monetary system, declaring particularly the have an effect on of Brexit on the UK’s commerce in objects, together with:

“It underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people.”

Keir Starmer’s authorities has pledged to deepen cooperation with the EU, though Brussels has made clear it’s unwilling to hold wide-ranging negotiations on the commerce and cooperation settlement (TCA).

Labour is in opposition to re-entering the EU’s single market or customs union. Instead, the federal authorities hopes to win further modest modifications much like mutual recognition {{of professional}} {{qualifications}} and a veterinary settlement that may alleviate the need for checks on meals exports.

Good morning, and welcome to our rolling safety of enterprise, the financial markes and the world monetary system.

Keir Starmer and Rachel Reeves are about to get their first quarterly progress report since taking office, and it’s not anticipated to be glowing.

At 7am GMT the first estimate of UK GDP for the third quarter of 2024 will doubtless be launched, along with for September alone.

Economists predict the monetary system grew by 0.2% in July-September, a relatively weak progress cost. That may very well be a slowdown on the 0.5% progress recorded in April-June, and the 0.7% in January-March.

If that happens, Labour’s gloomy focus on since profitable the general election in early July is extra more likely to take one other blame. Warnings of a ‘painful’ worth vary hit confidence amongst every clients and corporations, which might have a knock-on have an effect on on spending, and funding picks.

On the alternative hand, Reeves would possibly properly argue {{that a}} slow-moving monetary system justifies her push for progress – although the extra spending specified by remaining month’s worth vary is simply anticipated to supply a short-term elevate to monetary output…

Previous data have confirmed that the UK monetary system stagnated in June and July – as a result of the restoration from remaining yr’s shallow recession mild – sooner than returning to progress in August.

Sanjay Raja, chief UK economist at Deutsche Bank, predicts that the UK monetary system moved from a “spring sizzle” to a “summer simmer”.

After a steady H1-24, UK progress over summer time season will most likely gradual. We anticipate Q3-24 GDP progress to gradual to a further paltry 0.2% quarter-on-quarter.

We see September GDP, which might even be launched as part of the GDP data dump, rising by 0.2% month-on-month. Risks are skewed bigger on the quarterly print, nonetheless lower on the month-to-month September print, we count on.

The agenda

• 7am GMT: First estimate of UK GDP for Q3 2024

• 7am GMT: First estimate of UK GDP for September 2024

• 7am GMT: UK commerce steadiness for Q3 2024

• 8.30am GMT: Hong Kong’s GDP report for Q3 2024

• 9.30am GMT: UK productiveness data for Q3 2024

• 1.30pm GMT: US retail product sales for October