According to preliminary data released on Friday, the British economy stagnated in the third quarter.

After increasing by 0.2% in the previous quarter, the gross domestic product did not exhibit any quarterly growth in the three months ending at the end of September. The GDP of Britain during the third quarter of 2022 increased by 0.6% on an annual basis.

The production sector stagnated during the quarter, while the services sector’s output fell by 0.1%. However, the construction industry’s performance increased by 0.1%.

Jeremy Hunt, the Chancellor of the Exchequer of the United Kingdom, stated that the nation’s high rate of inflation is still the “single greatest barrier to economic growth,” despite the September consumer price index staying 6.7% year over year.

“The best way to sustainably grow our economy right now is stick to our plan and knock inflation on its head,” Hunt said.

“The Autumn Statement will focus on how we get the economy growing healthily again by unlocking investment, getting people back into work and reforming our public services so we can deliver the growth our country needs.”

According to Lindsay James, investment strategist at Quilter Investors, the data released on Friday validated an impending downturn that has been more strongly suggested by leading indicators in recent months. She noted that weaknesses in consumer spending and business activity have also resulted in a deflation of labour demand.

“September’s data did positively surprise thanks to the U.K.’s strong services sector, but was not enough to offset July’s negative print and produce any growth in Q3 relative to the previous quarter. While somehow avoiding a recession this year, today’s no growth reading means the UK economy is flatlining with only 0.2% economic growth in the last six months.” she said.

“Unfortunately, for many the economic pain has only been delayed. As the Bank of England stated earlier this month that more than half of the impact of higher interest rates on the level of GDP is still to come through, the U.K. economy faces growing headwinds as we approach 2024.”

(Adapted from CNBC.com)

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