Britain’s sluggish economy failed to grow in the July-September period, but at least managed to avoid the start of a recession, figures from the Office for National Statistics showed on Friday.
Gross domestic product changed 0 percent in the third quarter, compared with expectations for a 0.1 percent decline in a Reuters poll of economists, which many analysts said would likely mark the beginning of a recession.
In September alone, the economy grew by 0.2 percent compared to August, when growth was revised down to 0.1 percent from 0.2 percent. The Reuters poll indicated no change in gross domestic product in September.
For its part, Goldman Sachs raised its forecast for Britain’s GDP growth for this year to 0.6 percent, from a previous forecast of 0.5 percent.
Paul Dales, chief economist at Capital Economics, a consulting firm, said the finer details of the data showed that gross domestic product fell by a marginal 0.02 percent in the third quarter, even if the number was rounded to show no change. He continued: “But the main point is that the economy is not weak enough to quickly reduce core inflation and wage growth. “As such, we do not expect the Bank of England to be able to cut interest rates until late 2024, rather than mid-2024, as is widely expected.”
The Bank of England said last week that it expects zero economic growth next year, a difficult situation for Prime Minister Rishi Sunak, who is widely expected to call a national election in 2024, but the bank kept interest rates at the highest level in 15 years. year, while continuing to fight inflation, which exceeds three times its target of 2 percent. The Bank of England had expected a steady growth reading in the third quarter.
The Office for National Statistics said that in the three months to September, output in Britain’s huge services sector fell by 0.1 per cent, industrial production was broadly flat, while construction grew by 0.1 per cent.
Commenting on the data, Finance Minister Jeremy Hunt said that high inflation remains the biggest obstacle to growth, indicating that he will announce plans to open investment and return people to work in the budget update statement on November 22.
The Office for National Statistics said that Britain’s economy rose by 1.8 percent above its level in late 2019, which makes Britain’s post-Covid-19 recovery stronger than Germany’s recovery, but it lags far behind the United States, where the economy grew by more than 7 per cent. percent more than it was before the pandemic.
The British economy, like many other economies, especially in the world, faces headwinds represented by high interest rates, which aim to tame inflation.
The Bank of England, like other central banks, raised interest rates aggressively from almost zero as it sought to counter rising prices, which were fueled first by supply chain problems during the Corona epidemic, and then by the large-scale Russian invasion of Ukraine, which led to higher food and energy prices. .
“With higher interest rates reaching mortgage holders, and challenges in the labor market, activity is likely to remain flat until the middle of next year,” said Ian Stewart, chief economist at Deloitte.
2023-11-10 15:14:32
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