The UK Economy stalled in the third quarter of 2024, with growth revised down from the initial estimate of 0.1% to a flat performance. This marks a slowdown from the revised 0.4% growth recorded in Q2. The revisions highlight a weaker-than-expected economic recovery, reflecting ongoing challenges within key sectors, particularly in services and production.

Weak Performance in Services and Production

On the production side, the services sector saw no growth in Q3, down from the initial estimate of a 0.1% increase. The largest negative contribution came from financial and insurance activities, which declined by 0.6%. Meanwhile, production contracted by 0.4%, worse than the initially reported -0.2%, primarily driven by a 2% drop in electricity, gas, steam, and air conditioning supply. In contrast, construction saw growth of 0.7%, although this was slightly below the initial estimate of 0.8%.

Read more: UK Consumer Confidence Index Drops

Expenditure Trends and Trade Adjustments

On the expenditure side of UK Economy, exports and imports were both revised lower, with exports dropping by 0.5% (versus -0.2% in the first estimate) and imports falling by 2.5% (compared to -1.5%). However, net trade showed an increase, indicating some improvement in the trade balance. Household spending growth remained unchanged at 0.5%, while business investment rose more than initially estimated, increasing by 1.9% compared to 1.2%. Government consumption, however, was much lower than expected, increasing by only 0.1% instead of the anticipated 0.6%.

Capital Formation and Economic Outlook

These expenditure increases were partially offset by a 0.6% decline in gross capital formation, particularly due to a fall in the acquisitions less disposals of valuables. The weaker-than-expected Q3 performance suggests that while there are some positive signs in business investment and construction, broader economic challenges persist, particularly in trade and services. Looking ahead, the UK economy will need to address these weaknesses to drive sustainable growth in the final quarter of 2024 and beyond.

Source: https://tradingeconomics.com/united-kingdom/gdp-growth