Britain narrowly avoids recession with slight Q3 economic growth

Boris Johnson

Boris Johnson

The British economy avoided falling into recession in the third quarter of the year, but annual growth is running at a near-decade low rate as a result of ongoing uncertainty related to Britain's departure from the European Union and a subdued global backdrop, official figures showed Monday.

The Office for National Statistics said the 0.3% growth for the latest quarter signalled the economy "slowing" as the annual GDP rate had fallen to 1% since the same period in 2018.

With the global economy slowing and Brexit uncertainty still prevalent in the run-up to Britain's general election on December 12, few economists anticipate any marked improvement in the British economic outlook in the fourth quarter or even next year.

"GDP grew steadily in the third quarter, mainly thanks to a strong July", said an ONS spokesman.

"The dominant services sector was the main driver of GDP growth in the quarter with industrial production and construction sectors adding little to overall UK GDP growth".

"Manufacturing failed to grow as falls in most industries were offset by vehicle production bouncing back", he added.

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David Cheetham, chief market analyst at XTB, said the data "painted a not too pretty picture" of the state of the United Kingdom economy, as the manufacturing and industrial sectors performed worse than analysts expected.

A United Kingdom general election is scheduled for the fourth-quarter and brings the risk of either a hung Parliament or a socialist Labour party forming a coalition government, pointing to a further deceleration or stagnation as the year draws to a close, Scott said.

The Institute of Directors said that avoiding a recession is "nothing to celebrate", despite growth being "welcome". The GDP figures suggest that the economy failed to regain much momentum after Q2's 0.2% quarter-on-quarter contraction. The British pound traded at $1.2799 after the GDP data release.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. And further weakness is likely to be in store in Q4 - we have pencilled in a 0.2% q/q rise.

"[The] sterling meanwhile has taken the decision to have an early general election and the news that two Bank of England members voted for a rate cut last week largely in its stride".

"Over the a year ago, Britain's growth has slowed to its lowest rate in nearly a decade - a disastrous performance by the Conservatives, whose main economic policy of Brexit is a promise of yet more slow growth".

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