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 Kemp/Getty Images)
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Preliminary data showed on Friday that the British economy grew less than expected in the third quarter of this year, showing only marginal growth after rebounding at the beginning of the year.
In the three months to September, gross domestic product increased 0.1% from the previous quarter. That was lower than the 0.2% growth expected by economists polled by Reuters, after the economy expanded by 0.5% in the second quarter of this year.
The UK-led services sector also grew by only 0.1% in the quarter, the Office for National Statistics said. Construction rose 0.8% this month, while production fell 0.2%.
This comes after UK inflation dropped sharply to 1.7% Inflation fell below the Bank of England’s 2% target for the first time since April 2021 in September. Falling inflation paves the way for central banks to cut interest rates. 25 basis points On November 7, the key interest rate rose to 4.75%.
The Bank of England said last week it expected the Labor government’s tax increase budget to boost GDP growth by 0.75 percentage points within a year. Policymakers also pointed to the government’s fiscal plans leading to upward revisions to inflation forecasts.
UK Finance Minister Rachel Reeves said on Friday she was “not satisfied” with the figures.
“In my Budget I made tough choices to repair the foundations and stabilize our public finances. Now we will deliver growth through investment and reform, creating more jobs, putting more money in people’s pockets and keeping The NHS is back on its feet, rebuilding Britain and securing our borders in a decade of national recovery,” she said in a press release.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said the possibility of a rate cut at the Bank of England’s next meeting in December now looks “unlikely”. Inflation risks and growing global headwinds could prevent policymakers from cutting interest rates in a row, he said.
“These data suggest that the economy was already spinning out of control even before the Budget, as weak business and consumer confidence led to weaker output in the third quarter, particularly in September,” Thiru said in emailed comments.
The results of the recent U.S. election have created significant uncertainty about the impact of President-elect Donald Trump’s re-election on the global economy. While Trump’s proposed tariffs are expected to general inflation and Serious blow to European economysome analysts said that such measures can provide opportunities For the British economy.
Bank of England Governor Andrew Bailey last week revealed little about the bank’s views on Trump’s tariff agenda, but he did mention the risk of global fragmentation.
“Let’s wait and see where things go. I’m not going to prejudge what may or may not happen,” he told reporters at a news conference.
this GBP It edged up 0.1% against the dollar at 7:33 a.m. in London. EUR/EUR fell 0.15% after Friday’s GDP release.
