Chancellor Jeremy Hunt to Address Economic Slowdown in Autumn Budget
The UK economy has managed to avoid slipping into a recession this year, despite facing a period of stagnation, according to the latest data from the Office for National Statistics (ONS). Chancellor Jeremy Hunt plans to address the economic challenges in his autumn budget statement later this month, with a focus on revitalizing sluggish performance.
The ONS reports a 0.2% rise in gross domestic product (GDP) for the latest month, with contributions from the film production, health, and education sectors. However, the growth rate for August was revised down from 0.2% to 0.1%. While these figures indicate a lack of overall growth in the third quarter, the absence of two consecutive quarters of negative GDP means the UK narrowly avoids a recession this year.
Analysts had anticipated a 0.2% decline for the specified period. Notably, the manufacturing and construction sectors played a crucial role in supporting growth at the end of the quarter, preventing a more severe economic downturn.
Darren Morgan, the ONS director of economic statistics, commented on the performance, stating, “The economy is estimated to have shown no growth in the third quarter.” He highlighted declines in the services sector, particularly in health, management consultancy, and commercial property rentals, offset by growth in engineering, car sales, and machinery leasing. September saw slight growth, attributed to increases in film production, health, and education, partially offset by declines in retail and computer programming.
The Bank of England had forecasted zero growth for the economy next year, citing concerns about inflation, which remains more than three times its 2% target. Despite this, interest rates were maintained at a 15-year high.
In response to the ONS data, Jeremy Hunt emphasized the impact of high inflation on economic growth, identifying it as the “single greatest barrier.” He outlined plans to address these challenges in the autumn budget statement, aiming to stimulate growth by unlocking investments, increasing employment, and reforming public services.
Hunt stated, “The autumn statement will focus on how we get the economy growing healthily again by knocking inflation on its head. The British economy is much more resilient than many people predicted.”
On the opposition front, Labour’s shadow chancellor Rachel Reeves expressed concerns, stating, “These figures are further evidence that the economy is not working under the Conservatives, and working people are worse off.”
Economists, including Samuel Tombs, chief UK economist at Pantheon Macroeconomics, remain cautiously optimistic about the country’s economic outlook, suggesting that the chances of a recession appear low, despite the challenges faced in recent quarters.