UK economy suffers worst three months in decade after stagnating in October

The ONS also said year on-year growth in October was the weakest since 2012.

GDP figures
GDP figures

Britain’s economy has suffered its worst three months for more than a decade after official figures revealed output failed to grow once again in October.

The Office for National Statistics (ONS) said the economy saw zero growth month-on-month in October, following two months of declining gross domestic product (GDP).

This marks the first time the economy has failed to grow for three months in a row since early 2009 amid the recession following the financial crisis.

The ONS data also showed the economy grew by just 0.7% year-on-year in October – the worst such performance since June 2012.

And on a rolling three-month basis – seen as less volatile than the monthly data – the ONS said growth also stagnated in October, down from 0.3% growth between July and September.

It offers a weak backdrop for the economy ahead of Thursday’s General Election day and also sees a dismal start for the final quarter of 2019.

Labour and the Liberal Democrats were quick to pounce on the figures, blaming the Conservatives for the economy’s woes.

(PA Graphics)

Economists said the economy was in danger of stagnating in the fourth quarter and looked likely to undershoot the Bank of England’s expectations for 0.2% growth.

Jack Leslie, economic analyst at the Resolution Foundation, said: “The UK economy has slowed from a crawl to a halt over the course of 2019.

“Crucially the UK’s domestic challenges come against a weak global economic outlook for next year.

“While the main parties have avoided any discussion of this challenging economic environment during the election campaign, navigating it will be a central task for the next government nonetheless.”

The pound shrugged off the poor GDP figures as the City appeared to bet on a Conservative win on Thursday, with sterling up 0.3% at 1.318 US dollars and 0.2% higher at 1.189 euros.

But the FTSE 100 Index was nearly 1% lower, down 71.8 points at 7162.2.

The ONS data showed growth was hit by a poor performance in the construction sector, which saw output fall 2.3% month-on-month in October, while manufacturing also suffered a tough month amid Brexit and political uncertainty.

An ONS spokesman said: “There were increases across the services sector, offset by falls in manufacturing with factories continuing the weak performance seen since April.

“Construction also declined across the last three months with a notable drop in housebuilding and infrastructure in October.”

There were also disappointing official trade figures out on Tuesday, showing the deficit in goods and services widened to a seven-month high of £5.2 billion in October from £1.9 billion in September.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said stockpiling of exports ahead of the original October 31 Brexit deadline had “triggered another short-term surge in imports, prompting the overall trade deficit to balloon”.

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