The UK economy recorded zero growth between July and September, according to revised official data from the Office for National Statistics (ONS). The updated figures come against a backdrop of mounting economic challenges, including rising inflation and unexpected contraction in October.
These revisions raise fresh concerns about the state of the economy. Business leaders and analysts have warned of a possible recession in 2025, with firms bracing for higher costs and weaker demand.
Mounting Economic Pressures
Inflation is now climbing at its fastest pace in eight months, and the Bank of England recently decided to hold interest rates, citing worse-than-expected economic performance. Data from October to December also showed zero growth, further fueling fears of economic stagnation.
Simon French, chief economist at Panmure Liberum, highlighted concerns over the economy’s momentum since the general election in July, questioning whether this is a typical post-election slowdown or the start of a more serious downturn. The warning lights are flashing, and we may be heading toward a recession next year,” French said.
Business and Consumer Concerns
The Confederation of British Industry (CBI) issued a grim forecast based on its latest survey of nearly 900 firms. The results suggest that private sector businesses expect a “steep decline in activity” in the first quarter of 2025.
Alpesh Paleja, interim deputy chief economist at the CBI, warned: “Expectations are now at their weakest in over two years. Rising employer NICs and other Budget measures are exacerbating an already weak demand environment.”
The retail sector is also facing challenges. The British Retail Consortium (BRC) predicts a “January spending squeeze” as consumer confidence in the economy drops sharply. Retailers fear this could force them to raise prices or cut costs through store closures and recruitment freezes.
Economic Growth Revisions
The ONS revised its growth estimate for April to June down to 0.4% from 0.5%, highlighting weaker-than-expected performance in sectors such as hospitality, legal services, and advertising. Real household disposable income per head also showed no growth during this period.
Liz McKeown, director of economic statistics at the ONS, commented: “The economy was weaker than initially estimated, reflecting challenges in key service sectors.”
Political and Fiscal Challenges
The revisions are a blow to Labour, which has prioritized boosting economic growth. Chancellor Rachel Reeves acknowledged the challenges ahead: “The challenge to fix the economy after 15 years of neglect is huge.”
Shadow Chancellor Mel Stride criticized Labour’s performance, stating: “Growth has tanked on Labour’s watch, and the warning signs for 2025 are impossible to ignore.”
The UK government faces significant pressure to address these issues as businesses and consumers prepare for tougher economic conditions in the months ahead.
