GDP grew by 0.2 per cent in August 2024 after showing no growth in both June and July.
According to the Office for National Statistics, services output was the main contributor to the growth in the three months to August, rising 0.1 per cent.
There was also a 1 per cent increase in construction output, while production output showed no growth in this period.
Lindsay James, investment strategist at Quilter, felt that while growth remained “sluggish” and momentum appeared to be “stalling”, Labour could breathe a sigh of relief at the figures.
She said: “Despite the UK experiencing better-than-expected growth this year and upward revisions in economic forecasts, the gloom surrounding the economy has been hard to shake. Much of this is due to Labour’s rhetoric as they attribute difficult tax and spending decisions to their predecessors.
“Additionally, bond yields have risen recently as debt continues to grow and inflationary threats persist. Until there is clarity from this month’s budget, consumer and business confidence will likely remain muted, delaying any economic boost from these better GDP numbers."
Douglas Grant, group chief executive of Manx Financial Group said the figures showed “the national sense of sluggish frustration with investments stagnant and as if hands were being sat on,” and said the budget could not come “quickly enough”.
“We would urge UK businesses to seize this opportunity to reevaluate their lending strategies, bolstering financial stability and operational resilience in preparation for any potential negative economic and policy shifts," he explained.
“Recent research from Manx Financial Group sheds light on the ongoing struggles faced by SMEs: nearly a third have had to pause or scale back operations due to financial constraints in recent years. While this is an improvement from the 40 per cent in 2023, one in ten SMEs seeking external finance have been unable to secure it."
Rob Morgan, chief investment analyst at Charles Stanley said the stagnant growth picture would not cause any significant inflationary concerns at the Bank of England but said the figures may tilt the balance to a rate cut in November slightly.
He said: “Governor Andrew Bailey’s comments that the Bank could be “a bit more aggressive” with cuts if inflation data remains favourable did briefly raise hopes of a steeper downward trajectory for UK interest rates.
“However, this doesn’t really depart from his overall stance of data dependency. Moreover, the more inflationary picture emanating from the US and continued sticky wages and services prices calls for only a gradual withdrawal of restrictive policy."
alina.khan@ft.com
