The latest data from the Office for National Statistics (ONS) reveals that the UK Gross Domestic Product (GDP) experienced stagnation in the third quarter (Q3) of 2023, showing no growth.
This follows a modest increase of 0.2% in the preceding quarter.
In a year-on-year comparison, the GDP is estimated to have risen by 0.6% compared to the third quarter of the previous year. Notably, the additional bank holiday during that period, owing to the state funeral of Queen Elizabeth II, had led to altered business operations, contributing to the growth disparity.
Analysing the economic landscape between July and September, the stagnation in the third quarter marks the first time the UK economy has failed to grow since Q3 2022. September alone saw a marginal growth of 0.2%, following a 0.1% uptick in August.
The Resolution Foundation think tank has raised concerns, dubbing the UK a “stagnation nation” and warning of a looming recession risk. James Smith, Research Director at the Resolution Foundation, highlighted the impact of rising interest rates since late 2021 as a contributing factor to the recent economic stagnation.
Smith emphasised the urgency for addressing this economic challenge, stating: “There is a real risk that the UK could fall into recession for the fourth time in 15 years. Britain is a stagnation nation that has struggled to secure sustained economic growth since the financial crisis. Addressing this is the central task we face as a country, and must be at the heart of the Chancellor’s Autumn Statement in 10 days’ time.”
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The implications of the Q3 GDP report underscore the pressing need for policy measures and economic strategies to reignite sustainable growth and shield the UK from the looming threat of recession.