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News | Published November 11 2019

Economy to become general election battleground in the wake of latest ONS figures

Official figures from the Office for National Statistics revealed that the UK has avoided a recession in 2019, but the door has opened for the economy to be a key battleground in December’s general election.

The economy grew by 0.3 per cent in the three months to the end of September after suffering a 0.2 per cent contraction in the second quarter, thus avoiding a technical recession.

Chancellor Sajid Javid said that the figures showed solid economic growth and was a sign that the “fundamentals of the UK economy” were “strong”.

However, Ed Davey, deputy leader of the Liberal Democrats, took aim at the Conservatives for overseeing “anaemic” levels of economic growth, while Labour shadow chancellor John McDonnell said that Tory "hopes and expectations” for the economy were insufficient.

Although the growth in the third quarter fell below economists’ forecasts of 0.4 per cent, the economy held firm having been forced to contend with ongoing Brexit uncertainty and a slowdown in the global manufacturing arena, buoyed by strong consumer spending and growth in the dominant services sector.

Manufacturing output also flattened out after having shrunk 2.8 per cent in the second quarter, which came as a consequence of automotive plants bringing forward their annual shutdowns as a stockpiling measure ahead of the initial Brexit deadline of March 29.

Third quarter growth of 0.3 per cent also saw the UK economy outperform the Eurozone, which yielded growth of 0.2 per cent for the third quarter.

Yet, the third quarter slowdown in GDP growth to one per cent, the slowest rate of growth since 2010, has forced economists to take note.

The GDP outlook fell below even the Bank of England's expectations, which had forecast third quarter growth of 0.4 per cent.

The Bank has already anticipated that the economy will shrink by one per cent by the year 2022 as a result of the new Withdrawal Agreement negotiated between prime minister Boris Johnson and the EU, exacerbated by a weak global economy. 

It has since downgraded its growth projections for the next two years, reducing estimated growth for 2020 by 0.1 per cent and its 2021 outlook by 0.5 per cent.

Ruth Gregory, a senior UK economist at Capital Economics, said that the "pretty soft" state of the economy will not be the "news that the government might have hoped for" going into December's national poll.


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Authored by

Scott Challinor
Business Editor
@theparlreview
November 11 2019

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