UK economy avoids recession after return to growth in third quarter

UK economy avoids recession after return to growth in third quarter

The UK economy avoided falling into a recession after UK Gross Domestic Product (GDP) returned to growth in the third quarter.

GDP increased by 0.3% between July and September, according to the Office for National Statistics (ONS).

However, the economy was slightly weaker than both market expectations and the Bank of England’s latest forecasts, which had pointed to 0.4% growth for the period.

The economy had been at threat of entering a recession – which is defined by two consecutive quarters of economic decline – after it contracted by 0.2% in the three months to June 2019.

A spokesman for the ONS said: “GDP grew steadily in the third quarter, mainly thanks to a strong July.

“Services again led the way with construction also performing well. Manufacturing failed to grow as falls in most industries were offset by car production bouncing back following April shutdowns.

“The underlying trade deficit narrowed, mainly due to growing exports of both goods and services.”

The ONS said the quarterly figure highlights some signs of the economy “slowing”, as UK GDP had grown at 1% since the equivalent quarter in 2018. It said this represented the greatest year-on-year slowdown since 2010.

The 0.3% growth rate was particularly driven by 0.4% growth reported in July, driven by strong manufacturing figures on the back of strength in the pharmaceutical sector.

Meanwhile, the services and construction sectors delivered growth throughout the quarter as they were boosted by seasonal trends.

(PA Graphics)
(PA Graphics)

Manufacturing output was flat for the period, as was overall production, following Brexit-driven volatility in the previous quarters.

Elsewhere, an increase in UK-based film and TV production helped the information and communication industry to its sixth consecutive period of growth, as output increased by 0.8%.

Wholesale, retail and motor trades also saw a 0.3% increase in the quarter, accelerating from 0.1% in the previous period.

The ONS data dump also showed that the UK’s trade deficit narrowed once again, falling by £5 billion to £6.4 billion for the quarter.

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