The surprise of the British economy with the contraction in September
reported by Mehr News, according to the report of the British Office for National Statistics, the gross domestic product decreased by 0.1% in September after growing by 0.2% in the previous month. Economists in a Reuters poll had predicted 0.2 percent growth for September.
In the third quarter as a whole, the British economy grew by only 0.1% compared to the previous quarter. This is lower than the 0.2 percent growth expected by economists and follows a 0.5 percent growth in the second quarter of the year.
The Office for National Statistics announced that the UK’s dominant service sector also grew by just 0.1% in the quarter. Construction rose 0.8 percent, while manufacturing fell 0.2 percent on the month.
The latest reduction comes after UK inflation fell sharply to 1.7% in September, falling below the Bank of England’s 2% target for the first time since April 2021. The decrease in the inflation rate helped the central bank to cut the interest rate by 25 points on November 7, bringing its main rate to 4.75 percent.
The Bank of England announced last week that it expects the government’s tax hike budget to boost GDP by 0.75 percent over the course of a year. Policymakers also noted that the government’s fiscal plan has led to an increase in their inflation forecast.
Rachel Reeves, British finance minister On Friday, he said he was not satisfied with the numbers. According to him, in the new budget, difficult choices have been made to correct the foundations and stabilize the public finances. Now we want to deliver growth through investment and reform to create more jobs and more money in people’s pockets, get the public health system back on its feet and rebuild England.
Analysts have identified fundamental weakness in the economy and rising risks from geopolitical tensions as potential obstacles to further growth.
The outcome of the recent US election has created a lot of uncertainty about the global economic impact of another term of President-elect Donald Trump. While Trump’s proposed tariffs are expected to be broadly inflationary and hit the European economy hard, some analysts have said that such measures could provide opportunities for the British economy.
