The Bank of England in the City of London on November 6, 2024 in London, United Kingdom. The City of London is a city, ceremonial county and local government area containing the main central business district of London. The City of London is widely referred to as 'The City' and also known colloquially as 'The Square Mile'. (Photo by Mike Kemp/Photo via Getty Images)
Mike Kemp | In pictures | Getty Images
The British economy failed to achieve any growth in the three months to September, Revised numbers According to what the Office of National Statistics in the United Kingdom showed on Monday.
A Initial estimate For the third quarter, published by the Office for National Statistics last month, it said UK GDP grew by 0.1% over that period. However, final data released on Monday showed GDP growth of 0% from the previous quarter.
the British pound It fell slightly against the US dollar on Monday, trading around $1.2566 by 8:37 a.m. London time.
Monday's figures deal another economic blow to Britain, after a series of weak data dampened sentiment and raised questions about the fiscal strategy of the newly elected Labor government.
Earlier this monthThe UK economy unexpectedly contracted by 0.1% in October, Office for National Statistics data showed. This is the second consecutive monthly decline for the country's GDP, following a 0.1% decline. In September.
Looking ahead, Paul Dales, chief UK economist at Capital Economics, said he expected the UK economy to also stagnate in the last quarter of 2024 – but his view was not entirely pessimistic.
“Overall, these data suggest that after a bumper first half of the year, the economy stalled in the second half of the year due to a combination of persistent drag from higher interest rates, weak external demand and some concerns about the global economy.” “Policies are in the budget,” he said in a note on Monday.
“Our hunch is that 2025 will be a better year for the economy than 2024. But more recent data suggests that the economy does not have much momentum as the year comes to a close.”
Meanwhile, inflation appears to be moving higher again. The Office for National Statistics said Last week UK inflation rose to 2.6% in November, the second month in a row that prices have risen.
After that, the Bank of England maintained the base interest rate Stability at 4.75%. While markets were expecting no change in interest rates at Thursday's Monetary Policy Committee meeting, there was a surprise when three MPC members voted in favor of a rate cut (a Reuters poll expected only one member to vote in favor of a cut).
While Governor Andrew Bailey did previously mentioned Four interest rate cuts are possible next year, and traders are divided over when the Bank of England will resume cutting interest rates. LSEG data shows that markets are anticipating another comment at the February Monetary Policy Committee meeting, with a small majority of traders expecting a 25 basis points cut in interest rates in March.
This comes after British Finance Minister Rachel Reeves In late October He unveiled the first Labor government budget since replacing the old Conservative government In July.
The budget included plans from Prime Minister Keir Starmer's government to raise taxes by 40 billion pounds ($50.5 billion). Reeves said at the time that this would be achieved through a range of new policies, including increasing National Insurance payments to employers – a tax on profits – as well as increasing capital gains tax and income tax. Cancellation of fuel payments for the winter To retirees.
Some policies have been widely criticized. For example, higher taxes on National Insurance salaries have increased this tax Warnings From companies they will be less likely to hire new workers with a report from employment website Indeed earlier this month, suggesting that the policy has already impacted British job opportunities.
