Growth remained zero in the United Kingdom in the third quarter, a period marked by fears of large tax increases, since confirmed by the Labor government and which are considerably worrying businesses for the year to come.
This downward revision by the Office for National Statistics (ONS), which initially announced growth of 0.1% over the three months from July to September, is a hard blow for the government of Keir Starmer, for whom relaunching activity is a priority.
It is all the more difficult to accept as Labor has struggled to convince the British business world since their return to power in July, culminating in the presentation on October 30 by Finance Minister Rachel Reeves of a budget brutally increasing employer contributions.
“The UK’s economic outlook is not rosy”estimates Susannah Streeter, analyst at Hargreaves Lansdown. “The economy stagnated between July and September, before the budget threw another cold spell and led to a drop in production in October. »
According to her, “the long period of speculation that preceded the Rachel Reeves announcements probably didn't help” to activity between July and September, “because the rumor mill was running at full speed”.
Negative painting
“The challenge we face to recover our economy and properly finance our public accounts after 15 years of neglect is enormous”Rachel Reeves reacted in a press release to the announcement of this new estimate.
British Prime Minister Keir Starmer and Finance Minister Rachel Reeves, at Downing Street in London, October 28, 2024 / Hollie Adams / POOL/AFP/Archives
But she promises “long-term sustainable growth” et “more money in the pockets of citizens, thanks to increased investments”.
The ONS also revised downwards growth in the second quarter, just before Labor returned, from 0.5% to 0.4%.
“The economy was weaker in the second and third quarters of this year than our initial estimates suggested”car “bars and restaurants, law firms and the advertising industry, in particular”ont “recorded worse results”explains the ONS's director of economic statistics, Liz McKeown.
According to the organization, growth remained zero in the third quarter in services, while the increase of 0.7% in construction “was offset by a 0.4% drop in production”.
Added to this negative picture is the latest growth figure for October, which shows a decline in gross domestic product (GDP) of 0.1%, and inflation up 2.6% in November, which led the Bank of England to maintain its key rates to the detriment of activity.
Enough to seriously worry the country's businesses, which “expect a drop in activity” in the first quarter of 2025, according to a study published Monday by the CBI, the main British employers' organization.
This investigation “suggests that the economy is heading towards the worst of all worlds”underlines Alpesh Paleja, economist at the CBI. “Companies plan to cut both production and hiring, and forecasts for price growth are increasingly firm. »
According to him, the companies “continue to discuss the impact of the measures announced in the budget – in particular the increase in employer contributions to health insurance – which exacerbate an already lukewarm demand environment”.
Analysts are slightly less pessimistic, like Matt Swannell, at EY Item Club, who says he expects “that the British economy shows solid but not spectacular growth” in 2025.
Sam Miley, economist at the CEBR think tank, expects “the British economy is growing by just 0.9% this year” more “with a modest improvement to 1.3%” next year.
