UK economy flatlines but avoids recession

UK economy  People walk over London Bridge looking at a view of Tower Bridge in the City of London financial district in London, Britain, October 25, 2023.  REUTERS/ Susannah Ireland

UK economy flatlined in September amid higher interest rates. Photo: Susannah Ireland/Reuters (Susannah Ireland / reuters)

The UK’s economy has slid into stagnation as official figures show the economy flatlined in the third quarter of the year.

Gross domestic product (GDP) rose by 0.2% over the month, showing no change from August, according to the National for National Statistics (ONS). GDP measures the value of goods and services produced by the economy.

Despite the weak figures, the UK economy managed to avoid a recession this year, which is defined as two consecutive quarters of negative GDP.

Economists had predicted that the economy would shrink by 0.1%.

Overall, the impact of high interest rates and inflation weighed on consumers and businesses. The services sector shrank slightly, while construction expanded slightly.

The Bank of England last week left interest rates unchanged at 5.25% for a second consecutive time, amid signs the economy is weakening. It had previously raised interest rates 14 times since the end of 2021.

ONS director of economic statistics Darren Morgan said: “The economy is estimated to have shown no growth in the third quarter. Services dropped a little with falls in health, management consultancy and commercial property rentals. These were partially offset by growth in engineering, car sales and machinery leasing.

“There were also small growths in manufacturing, led by cars and metal products, while construction grew due to new commercial property work.

“In the month of September the economy grew slightly, with increases in film production, health and education. This growth was partially offset by falls in retail and computer programming.”

Watch: ‘Much too early’ to cut borrowing costs, Bank says after holding rates at 5.25%

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