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The UK economy recorded zero growth between July and September.

The UK economy recorded zero growth between July and September.

 



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The UK economy recorded zero growth between July and September, revised official figures showed.

The revised data comes after a string of disappointing figures, including inflation rising at the fastest pace in eight months and the economy contracting unexpectedly in October.

CBI, one of the UK's leading business groups, said in its latest business survey that “the economy is headed for the worst”.

Prime Minister Rachel Reeves said “the challenge of fixing an economy that has been neglected for 15 years is enormous” and shadow chancellor Mel Stride said Monday's figures showed “growth has been crushed under Labour's watch”.

This revised figure is expected to be a blow to the government, whose top priority is to stimulate the economy.

Labor has pledged to deliver the most sustained economic growth in the G7 group of the world's wealthiest countries.

Businesses have already warned that measures announced in the October budget, including higher employer national insurance contributions (NICs) and a higher minimum wage, could lead to job losses and higher prices.

These budget changes will take effect in April. But Stride said “warning lights are blinking” about how the economy will perform in 2025, according to the latest figures, which come three months before the budget is released in October.

Reeves said Labor's budget would “deliver sustainable long-term growth, putting more money in people's pockets through increased investment and ongoing reforms”.

Liberal Democrat Treasury spokeswoman Daisy Cooper called on the government to reverse national insurance tax increases for small and medium-sized businesses and abolish the business rates system.

Reduction in workforce and rising prices

The CBI, which claims to represent 170,000 companies, said the survey, based on responses from 899 companies between November 25 and December 12, found that private sector companies across all industries “will see a sharp decline in activity” in the first three months of 2025. “He said he expected it to happen.

“Expectations are now the weakest in two years,” said Alpesh Paleja, interim deputy chief economist at the CBI.

A separate survey by the British Retail Consortium, which represents UK retailers from Marks and Spencer to Tesco, suggested a “January spending squeeze is imminent” for consumers.

A Consumer Sentiment Index survey found that public confidence in economic conditions has plummeted this month.

Helen Dickinson, chief executive of BRC, said: “With sales growth failing to keep pace, retailers will have no choice but to raise prices or cut costs, close stores and freeze recruitment.”

Mick Dore, general manager of the Alexander pub in Wimbledon, said costs for his 50 to 60 staff would rise in April due to a rise in national insurance premiums.

“The whole of December has been hectic for us with a lot of work parties,” he told BBC Breakfast. “There are cost issues ahead and we need to have a good Christmas to prepare for that.”

But he said he was optimistic about next year's business.

“I generally think we'll be fine. I've been around a long time and every time they tell me the end is near, it's never been that way.”

'We're experiencing a recession?'

“There is no doubt that some businesses and households are holding back on spending and investing within their budgets,” said Paul Dales, chief economist at Capital Economics. But he said it was “too early to see the true impact of Labor’s policies”.

He said it would be a matter of time before delays caused by higher rates were buoyed by lower rates, but he expected an improvement in the second half of next year.

Simon French, chief economist at Panmure Liberum, said the revised figures were “consistent with many other indicators showing a loss of economic momentum since the July general election.”

He said there were questions about whether this was a typical economic slowdown seen after previous general elections that later recovered, or whether it was “more problematic to cause a recession next year”.

The Bank of England decided to keep interest rates on hold on Thursday, saying it believes the UK economy performed worse than expected and failed to grow at all from October to December.

The UK economy is measured by gross domestic product (GDP), which measures all economic activity by domestic businesses, government and citizens.

The ONS provides initial estimates of the UK's economic performance and revises them as it receives more data.

On Monday, the April-June growth rate was also revised downward from 0.5% to 0.4%.

It said the economy was weaker than initially expected due to poor performance by bars, restaurants, law firms and advertising firms.

Liz McKeown, ONS director of economic statistics, said: “In reality, household disposable income per capita has shown no growth.”

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