UK Economy - slowest annual growth for a decade.

The Office for National Statistics, ONS, has said that year on year growth in the economy for the three months to end-September slowed to 1% from 1.3% in the second quarter.

An ONS spokesman said:

“Looking at the picture over the last year, growth slowed to its lowest rate in almost a decade”.

The economy had shrunk in the second quarter and two quarters of contraction would have signalled a recession.  But the economy avoided a recession by growing 0.3% in the third quarter.

Economy expands slower than forecast.

The economy expanded by 0.3% in the third quarter. Despite this it was not as fast as the 0.4% forecast by economists, including at the Bank of England.

A statistician at the ONS said GDP grew “steadily” in the third quarter. That was largely as a result of “strong July”.

“Services again led the way, with construction also performing well. Manufacturing failed to grow, as falls in many industries were offset by car production bouncing back following April shutdowns.
“The underlying trade deficit narrowed, mainly due to growing exports of both goods and services.”

ONS

The economy in September.

In the month of September, GDP fell by 0.1%, as had been expected.

But the ONS revised down the contraction in August to 0.2% from 0.1%.  It was the growth of 0.3% in July that drove the economy in the whole of the third quarter.

“The fact that growth was positive in the third quarter was largely due to a strong July.
“Output then fell back in August and September, which points to a lack of momentum in the economy going into the fourth quarter.”

John Hawksworth, chief economist at PwC.

Did Brexit stockpiling have an impact?

In the March to June period, when Brexit stockpiles were unwound after the first Brexit date of 29 March, the economy had unexpectedly contracted by 0.2% in the second quarter.

However, Economists say that the latest set of data show there was no evidence of stockpiling ahead of the second Brexit deadline, on 31 October.

Samuel Tombs, economist at Pantheon Macroeconomics, said he had expected a boost to GDP growth from preparations ahead of the now-abandoned Brexit deadline.

“It possible that stockpiling occurred to a greater extent at the start of the fourth quarter,” he said.

What does it tell us about the economy?

Ruth Gregory, senior UK economist at Capital Economics, said that while the economy avoided a recession in the third quarter, the economy was “pretty soft”.

“The GDP figures suggest that the economy failed to regain much momentum after the the second-quarter contraction.

“While the election is just under five weeks away, clearly this isn’t the good news the government might have hoped for.”

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