The UK economy edged up by just 0.1% in the third quarter of 2024, a slower pace than many had anticipated, according to figures released on Friday.
Key Highlights:
- Lower-than-expected growth: Economists, including those at the Bank of England, had predicted a 0.2% rise, down from the brisker pace earlier this year.
- 2024 forecast trimmed: The Bank of England recently revised its annual growth outlook for 2024 from 1.25% to 1%, with a more optimistic view for 2025.
- Comparative performance: Among major advanced economies, only Germany has fared worse in economic recovery since the pandemic.
A Sluggish Recovery from the Pandemic
Despite some recovery in the first half of 2024, driven by a rebound from the shallow recession of 2023, Britain's economic progress remains sluggish. Comparatively, the UK trails behind most other leading economies, with only Germany struggling more—largely due to the impact of soaring energy prices following the conflict in Ukraine.
Political Promises on Growth
Prime Minister Keir Starmer has set an ambitious target of achieving 2.5% annual growth, a level not consistently reached since before the 2008 financial crisis. Meanwhile, Finance Minister Rachel Reeves aims to position Britain as the fastest-growing G7 economy on a per capita basis for two consecutive years.
Outlook for 2025
While the Bank of England has lowered its expectations for 2024, it predicts a brighter 2025, buoyed by the government's high-spending initiatives unveiled in the latest budget. These measures are designed to give a short-term boost to the economy, with the hope of fostering more sustainable growth in the future.
What Does This Mean for Households?
For most Britons, the economy's tepid growth translates to a mixed bag. On the one hand, slow growth may ease inflationary pressures, but on the other, it could mean fewer job opportunities and limited wage increases. As the government rolls out its budget plans, many will be watching closely to see if these strategies can deliver a tangible improvement in living standards.
Source: (Investing.com, Reuters)
