UK economy stagnates in third quarter

(Sharecast News) - The UK economy stagnated in the third quarter, according to figures released on Friday by the Office for National Statistics.

GDP was unchanged in the three months to September, versus consensus expectations for a 0.1% contraction.

Activity in the services sector shrank 0.1%, while construction grew 0.1% and production was flat.

For the month of September, GDP rose 0.2% on the month following 0.1% growth in August, which was revised down from 0.2%. Economists were expecting no growth.

Darren Morgan, ONS director of economic statistics, said: "The economy is estimated to have shown no growth in the third quarter.

"Services dropped a little with falls in health, management consultancy and commercial property rentals.

"These were partially offset by growth in engineering, car sales and machinery leasing.

"In the month of September the economy grew slightly, with increases in film production, health and education.

"This growth was partially offset by falls in retail and computer programming."

Paul Dales, chief UK economist at Capital Economics, said: "The key point is that the economy is not weak enough to reduce core inflation and wage growth quickly.

"As such, we don't expect the Bank of England will be able to cut interest rates until late in 2024 rather than in mid-2024 as widely expected."