Bank of England in the City of London on November 6, 2024 in London, United Kingdom. The City of London is a city, ceremonial county and local government district in which the main central business district of London's CBD is located. The City of London is commonly referred to simply as the City, colloquially known as the Square Mile. (Photo: Mike Kemp/In Pictures via Getty Images)
Mike Kemp | In the photos | Getty Images
The British economy achieved no growth in the three months to September, corrected data The British Office for National Statistics reported on Monday.
AND preliminary cost estimate for the third quarter, published by the ONS last month, shows that UK GDP grew by 0.1% over the period. However, the final data released on Monday showed 0% GDP growth compared to the previous quarter.
The British pound it was slightly lower against the U.S. dollar on Monday, trading at around $1.2566 by 8:37 a.m. London time.
Monday's figures represent another economic blow to Britain after a series of weak data releases that dampened sentiment and raised questions about the newly elected Labor government's fiscal strategy.
Earlier this monthONS data showed that the British economy unexpectedly contracted by 0.1% in October. This was the country's second consecutive monthly decline in GDP, following a 0.1% decline in September.
Looking ahead, Paul Dales, chief UK economist at Capital Economics, said he expected the UK economy to stagnate in the last quarter of 2024, but his view was not entirely pessimistic.
“Overall, these data suggest that, after a strong first half of the year, the economy has stalled in the second half of the year on a combination of continued drag from higher interest rates, weaker foreign demand and some concerns about fiscal policy,” he said in a statement on Monday. note.
“Our gut feeling is that 2025 will be a better year for the economy than 2024. However, more recent data suggests that the economy will not gain much momentum at the end of the year.”
Meanwhile, inflation looks set to start rising again. The ONS said last week that UK inflation rose to 2.6% in November, marking the second consecutive month of price increases.
The Bank of England then maintained its base interest rate constant at 4.75%. Although markets did not expect any change in interest rates at Thursday's Monetary Policy Committee (MPC) meeting, it came as a surprise that three MPC members voted to cut interest rates (a Reuters poll predicted that only one member would vote for a cut).
While Gov. Andrew Bailey did previously signaled There will be four possible interest rate cuts next year, with investors divided over when the Bank of England will resume cutting interest rates. LSEG data shows that markets expect another rate cut at the February MPC meeting, with a slim majority of traders expecting a 25 basis point rate cut in March.
This ruling came after UK Finance Minister Rachel Reeves at the end of October presented the first budget of a Labor government since replacing the long-standing Conservative government in July.
The budget included 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 range of new policies, including an increase in employers' national insurance contributions – the tax on earnings – as well as an increase in capital gains tax and abolition of winter fuel fees retirees.
Some of these policies have been met with widespread criticism. For example, the increase in social security payroll tax contributed to this warnings from companies that are less likely to hire new workers report from recruitment website Indeed earlier this month, which suggested the policy had already spread to UK job offers.