UK Economic Growth Stalls in Q3 2024

The British economy showed no growth in the third quarter of 2024, with GDP revised down from an initial estimate of 0.1%. This follows a 0.4% expansion in Q2, marking a sharp deceleration in economic activity.

Sectoral Performance

On the production side, the services sector, which represents a significant portion of the UK economy, stagnated with no growth, a downward revision of 0.1% from initial estimates. The financial and insurance activities sector was the largest drag, contracting by 0.6%.

• Construction: Grew by 0.7%, showing resilience amid broader economic stagnation.
• Production: Declined by 0.4%, primarily due to a sharp 2% drop in electricity, gas, steam, and air conditioning supply.
• Manufacturing: Fell slightly by 0.1%, contributing to the overall weakness in production.

Expenditure Trends

On the expenditure side, there were mixed results:

Positive Contributions

• Net Trade: Improved during the quarter.
• Household Spending: Increased, reflecting consumer resilience.
• Gross Fixed Capital Formation and Government Consumption: Both contributed positively to GDP.

Negative Contributions

• Gross Capital Formation: Declined, particularly in the acquisition of valuables less disposals, offsetting gains elsewhere.

Overall

The stagnant growth in Q3 highlights the fragility of the UK economy, with gains in construction and household spending counterbalanced by declines in production and gross capital formation.

The lack of momentum in the services sector and continued weaknesses in manufacturing and energy supply signal ongoing challenges for sustained recovery.