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UK economy suffers worst three months in decade after stagnating in October

UK News | Published:

The ONS also said year on-year growth in October was the weakest since 2012.

GDP figures

Britain’s economy has suffered its worst three months for more than a decade after official figures revealed output failed to grow once again in October.

The Office for National Statistics (ONS) said the economy saw zero growth month-on-month in October, following two months of declining gross domestic product (GDP).

This marks the first time the economy has failed to grow for three months in a row since early 2009 amid the recession following the financial crisis.

The ONS data also showed the economy grew by just 0.7% year-on-year in October – the worst such performance since June 2012.

And on a rolling three-month basis – seen as less volatile than the monthly data – the ONS said growth also stagnated in October, down from 0.3% growth between July and September.

It offers a weak backdrop for the economy ahead of Thursday’s General Election day and also sees a dismal start for the final quarter of 2019.

Labour and the Liberal Democrats were quick to pounce on the figures, blaming the Conservatives for the economy’s woes.

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ECONOMY GDP
(PA Graphics)

Economists said the economy was in danger of stagnating in the fourth quarter and looked likely to undershoot the Bank of England’s expectations for 0.2% growth.

Jack Leslie, economic analyst at the Resolution Foundation, said: “The UK economy has slowed from a crawl to a halt over the course of 2019.

“Crucially the UK’s domestic challenges come against a weak global economic outlook for next year.

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“While the main parties have avoided any discussion of this challenging economic environment during the election campaign, navigating it will be a central task for the next government nonetheless.”

The pound shrugged off the poor GDP figures as the City appeared to bet on a Conservative win on Thursday, with sterling up 0.3% at 1.318 US dollars and 0.2% higher at 1.189 euros.

But the FTSE 100 Index was nearly 1% lower, down 71.8 points at 7162.2.

The ONS data showed growth was hit by a poor performance in the construction sector, which saw output fall 2.3% month-on-month in October, while manufacturing also suffered a tough month amid Brexit and political uncertainty.

An ONS spokesman said: “There were increases across the services sector, offset by falls in manufacturing with factories continuing the weak performance seen since April.

“Construction also declined across the last three months with a notable drop in housebuilding and infrastructure in October.”

There were also disappointing official trade figures out on Tuesday, showing the deficit in goods and services widened to a seven-month high of £5.2 billion in October from £1.9 billion in September.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said stockpiling of exports ahead of the original October 31 Brexit deadline had “triggered another short-term surge in imports, prompting the overall trade deficit to balloon”.

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