Financial experts have offered a sobering warning about the prospects for the UK economy under Chancellor Rachel Reeves’ leadership, with one saying it was a recipe for “No growth Britain”.
Official data from the Office for National Statistics (ONS) today paint a bleak picture, showing that UK economic growth slowed sharply in the third quarter of 2024. Between July and September, the economy grew by just 0.1%, a steep decline from the 0.5% recorded in the previous quarter and below economists’ predictions of 0.2%.
The economy also contracted by 0.1% in September, driven by declines in manufacturing and IT services, while the services sector, which forms the backbone of the UK economy, recorded no growth.
Commenting, Riz Malik, an independent financial adviser at R3 Wealth, said: “When people land at any UK airport, the captain of the plane needs to say, ‘welcome to no growth Britain.
“Unfortunately, we need to get used to growth figures starting with a zero or minus sign. On October 30, the Chancellor hammered the final nail into the coffin of growth for UK plc.”
In a reference to Sir Keir himself, he added: “Unless she or her line manager does something to turn it around, we have serious problems.”
Mr Malik’s remarks underline mounting frustration with the government’s economic policies and their perceived inability to address the nation’s challenges.
Stephen Perkins, managing director at Yellow Brick Mortgages said: “These pre-Budget economic figures are weak enough in themselves and do not yet show the current landscape, where businesses were attacked in the Budget and things have got worse.
“The coming quarters will show the impact of job losses and the knock-on effect that has on economic productivity as companies seek to manage the pain. As the year ends and we head into 2025, it’s hard to feel upbeat.”
Chris Barry, director at Thomas Legal warned: “Growth in the UK is lagging behind other major economies around the world and the outlook, based on this third quarter data, makes for bleak reading. Businesses should batten down the hatches for a harsh winter. The hope is that spring will bring some much-needed green shoots but the after-effects of the Budget have yet to feed through.”
Liz McKeown, ONS director of economic statistics, noted that “growth was subdued across most industries,” reflecting widespread challenges in key sectors.
The lack of substantial growth has also raised concerns among economists, with Ben Jones from the Confederation of British Industry pointing to uncertainty in the run-up to the Budget as a factor, while acknowledging: “Hopefully, this will prove to be a blip.”
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, noted that the economy was already showing signs of slowing before the Budget.
He added: “Following a ‘gangbusters’ first half of the year, the third quarter outturn paints a more realistic picture of the UK’s underlying growth trajectory.”
Julian Jessop, economics fellow with the Institute of Economic Affairs, said: “The news that the UK economy stalled again in the third quarter shows the importance of animal spirits as a driver of growth. The incoming government’s downbeat rhetoric about the ‘economic inheritance’ clearly had a negative effect on business and consumer confidence.
“Many firms put new orders and recruitment on hold, and the large increases in taxes and other business costs in the October Budget mean that things are likely to get worse before they get better.”
Ms Reeves has defended her economic strategy, insisting that improving growth remains central to her agenda.
Ms Reeves’s Autumn Budget, which included increased government spending and higher business taxes, has faced criticism for stifling investment. Manufacturing output declined by 0.2% over the quarter, while the construction sector grew by a modest 0.8%.
Reacting to the latest figures, she said: “Improving economic growth is at the heart of everything I am seeking to achieve, which is why I am not satisfied with these numbers. At my Budget, I took the difficult choices to fix the foundations and stabilise our public finances.
“Now we are going to deliver growth through investment and reform to create more jobs and more money in people’s pockets, get the NHS back on its feet, rebuild Britain and secure our borders in a decade of national renewal.”
