Data confirms slowdown in UK economic growth

Danni Hewson, head of financial analysis at AJ Bell, comments on the revised UK GDP figures, highlighting an economy struggling to gain momentum amid tough conditions, cautious households and hesitant businesses, and underlining how challenging it remains for the government to turn weak growth into a more compelling economic story.

Danni Hewson, AJ Bell head of financial analysis, comments on the revised UK GDP figures:

“The UK growth story isn’t exactly a page turner and the latest revisions by the ONS describes an economy struggling to trudge through difficult conditions. 

“The impact of the cyber-attack on Jaguar Land Rover, which brought its vehicle production to a standstill grabbed headlines and did have a marked impact on the production data for Q3 but set aside the impact of that exceptional situation and it’s the same old story.

“There is growth but not much, and the fact that the second quarter only managed to expand at 0.2% and not the 0.3% that had been initially thought, shows just how difficult it is for the government to deliver on its pro-growth promises. 

“It’s not just the UK struggling to find the right fertiliser. In fact, despite the downward revision for the second quarter of the year the UK economy still came out joint top for G7 performance in the first half of the year.

“There are signs that households might be loosening the purse strings a little with the household saving ratio falling by 0.7% in the three months to September as interest rates edged back.

“But people are still being cautious and if they can put by cash to keep their rainy-day fund topped up many are still choosing to do so, nervous about rising unemployment and still scarred by the impact of both the pandemic and the cost of living crisis which have dominated the last five years.

“With the Bank of England expecting growth to come to a standstill in the last few months of the year, thanks in part to the impact of the Budget on overall confidence, it’s clear there are huge challenges to overcome if the UK’s growth story is going to become more compelling.

“Persuading people to spend a bit more and encouraging businesses to dust off any expansion plans they’d set aside will require more than just a period free of destabilising speculation. It will require inspirational leadership and a commitment to delivering some of the growth focussed changes that are already in the mix.”