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UK economy stagnated in last quarter with no growth

Rolling coverage of the latest economic and financial news, as UK GDP is unchanged in July-Setptember

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Today's agenda

The UK economy stagnated in the last quarter.

The Office for National Statistics has reported that GDP was unchanged in July-September, compared with the previous quarter.

That is slightly better than the 0.1% contraction expected by City economists but shows the economy flatlined over the summer.

The ONS says that the services sector shrank slightly, while construction expanded a little.

The zero growth recorded in July-September is the UK’s worst quarterly performance in a year, since the economy contracted in Q3 2022.

The UK’s service sector contracted by 0.1% in the last quarter, driven by a drop in activity in the real estate sector, and in transportation and storage.

That shows the impact of higher interest rates on the economy, leading to a drop in house sales.

The ONS said: "The largest contributions to the fall were from a decline of 0.4% in real estate activities and a 1.2% fall in the transportation and storage subsector.

"Within real estate activities, the largest fall was in buying and selling, renting and operating of owned or leased real estate, which fell by 1.6%. Within transportation and storage, there were falls in five out of six of the industries."

Growth in the UK’s factory sector slowed sharply in the last quarter.

Today’s GDP report shows that manufacturing output increased by 0.1% in July-September, after growth of 1.9% in the previous quarter.

The largest positive contribution came from the manufacture of transport equipment, following strong car production this year.

The chancellor, Jeremy Hunt, has blamed high inflation for the UK’s lacklustre economic performance.

He 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.”

The agenda
• 12.30pm GMT: European Central Bank's president, Christine Lagarde, speaks at Financial Times’ Global Boardroom 2023
• 1pm GMT: Russian trade balance
• 3pm GMT: University of Michigan’s index of US consumer confidence

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