UK avoids recession with Q3 rise in growth
A slight but steady increase in GDP during July and September has kept the UK from entering a recession.
Growth in services and construction sectors
While manufacturing output was flat over the quarter, mainly attributed to Brexit uncertainties, both the dominant services sector and construction delivered growth.For the sixth quarter in a row, the information and communication industry proved one of the nation's most successful sectors, recording 0.8 per cent growth in Q3, led by output in film and TV production.Related articles
- Rate cut a possibility as global growth stalls
- City backs Boris - but not his Brexit deal
- Government promises fast-track health visas
However, Tej Parikh, chief economist at the Institute of Directors, expressed fears that growth across the economy as a whole could slow in the current quarter. "The UK economy has been in stop-start mode all year, with growth punctuated by the various Brexit deadlines," he says. "Indeed, the pick-up in the third quarter numbers may slightly exaggerate the strength in the economy, with some activity likely to have been brought forward before 31 October. The final quarter of 2019 could be weaker as stockpiles continue to be run down.“While high employment has provided some support for the economy, underlying weaknesses in investment and productivity still need addressing. With uncertainty likely to persist and a continued slowdown in global markets, the onus is on the new government to stimulate economic activity and move the UK beyond its current yo-yo pattern of growth.”
Brexit uncertainty hinders the economy
Suren Thiru, head of economics at the British Chambers of Commerce, says he remains concerned after the data showed the economy shrank slightly in both August and September. "The stronger headline figure masks an alarming loss of momentum through the quarter from a relatively strong July outturn and, therefore, does little to suggest any meaningful improvement in UK’s underlying growth trajectory," he says."Despite the pick-up in growth, a slowing global economy has weakened firms’ cashflow, disrupted supply chains and stifled investment, and is likely to squeeze economic activity in the fourth quarter and beyond, unless action is taken."John Hawksworth, chief economist at PwC, puts much of the blame for economic unsteadiness on the confusion surrounding the UK's exit from the European Union. "Household spending remains the main motor of growth, with a 0.4 per cent rise in the third quarter bolstered by stronger earnings growth," he says."By contrast, business investment was flat, reflecting the continued drag from Brexit-related uncertainty, which looks set to continue into the fourth quarter.”Read more news and views, from David Sapsted.
Subscribe to Relocate Extra, our monthly newsletter, to get all the latest international assignments and global mobility news.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory©2024 Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.