UK economy stagnates in Q3
In output terms there was a 0.1% fall in the services sector, which offset a 0.1% increase in construction output and broadly flat output in the production sector
UK GDP has shown no growth in July-September (Q3) compared with an increase of 0.2% in the previous quarter, according to the latest data from the Office for National Statistics (ONS).
Compared with the same quarter a year ago, GDP is estimated to have increased by 0.6% in Q3 2023. The ONS monthly estimates revealed that GDP increased by 0.2% in September, following growth of 0.1% in August and an unrevised 0.6% fall in July 2023.
In output terms there was a 0.1% fall in the services sector, which offset a 0.1% increase in construction output and broadly flat output in the production sector.
In expenditure terms, an increase in the volume of net trade was offset by falls in business investment, household spending and government consumption. The fall in government consumption in the latest quarter mainly reflects lower spending on health and on education, which fell by 1.4% and 0.3%, respectively.
In Q3 2023, there was a 0.1% fall in the services sector, which offset a 0.1% increase in construction output and no growth in the production sector.
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. The largest positive contribution to growth was from the professional, scientific and technical activities subsector, which grew by 0.6%.
Within the production sector, manufacturing output increased by 0.1%, following growth of 1.9% in the previous quarter.
The ONS also revealed that there was a fall of 0.4% in real household expenditure in Quarter 3 2023. Within household consumption, the largest contributions to the fall in the latest quarter were from lower spending on miscellaneous goods and services, transport, and spending on food and non-alcoholic drink.
Ben Jones, lead economist from CBI, said: “Forecasts for the UK economy have generally been edging down recently and the latest growth figures lived up to this gloomier view of near-term prospects. It’s clear that higher interest rates are starting to bite, and demand has become less resilient. CBI surveys agree with that overall picture and suggest that private sector activity is likely to stagnate in the coming months.
“Unlocking business investment across the economy by making full expensing permanent could – according to CBI analysis – lead to a 2% increase to GDP by the end of the decade.”
