Published: Mon, November 11, 2019
Markets | By Otis Pena

United Kingdom growth slowest in nearly a decade, says ONS

United Kingdom growth slowest in nearly a decade, says ONS

Gross domestic product grew 0.3%, returning to growth following a 0.2% contraction in the second quarter but coming in a little below expectations of 0.4% growth. "Narrowly avoiding a recession is nothing to celebrate", said Tej Parikh, economist at the Institute of Directors.

"GDP grew steadily in the third quarter, mainly thanks to a strong July", said an ONS spokesman.

The U.K. may have ducked a recession, but it's seeing it's weakest growth in a decade and may struggle to expand if the rest of the global economy is slowing, said Artur Baluszynski, head of research at Henderson Rowe. The economy had shrunk in the second quarter, and two quarters of contraction would have signaled a recession. Barclays had said in a note sent to clients on Sunday: "We expect Q3 GDP to print at 0.4%, supported by temporary factors relating to the vehicle factory closures". Sterling was up 0.7% against the euro (GBPEUR=X) to €1.1676 and up 0.8% against the dollar (GBPUSD=X) to $1.2879 at around 12.25pm after the latest data was released.

The quarterly growth rate recovered to 0.3 per cent after contracting 0.2 per cent in the three months to June when businesses wrestled with an overhang of raw materials stockpiled before the original Brexit deadline in March.

Last week the BoE nudged up its growth forecast for 2019 to 1.4% from 1.3% - largely because of its expectation of a bigger pick-up in the third quarter than it forecast before.

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"Looking at the picture over the previous year, growth slowed to its lowest rate in nearly a decade". Manufacturing output fell more than expected, down 0.4% on the quarter and 1.8% on the year.

Meanwhile the British shoppers grew more cautious about their spending in the three months to September despite enjoying real growth in their wages, raising concerns about the health of the economy in the run-up to Brexit. Manufacturing failed to grow, as falls in many industries were offset by vehicle production bouncing back following April shutdowns.

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

The economy was somewhat volatile in the first half of this year when Britain was originally supposed to leave the European Union.

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