UK economy avoids recession with 'feeble' 0.3% growth
Video report by ITV News Economics Editor Joel Hills
The UK economy avoided falling into a recession after UK Gross Domestic Product (GDP) returned to growth in the third quarter.
GDP increased by 0.3% between July and September, according to the Office for National Statistics (ONS).
However, the economy was slightly weaker than both market expectations and the Bank of England's latest forecasts, which had pointed to 0.4% growth for the period.
The economy had been at threat of entering a recession - which is defined by two consecutive quarters of economic decline - after it contracted by 0.2% in the three months to June 2019.
In response to the news, ITV News Business and Economics Editor Joel Hills tweeted: "Economy 1% bigger than it was a year ago. That’s better than negative but feeble growth by past standards."
ITV News Economics Editor breaks down the significance of the figures released today
A spokesman for the ONS said: "GDP grew steadily in the third quarter, mainly thanks to a strong July.
"Services again led the way with construction also performing well. Manufacturing failed to grow as falls in most industries were offset by car production bouncing back following April shutdowns.
"The underlying trade deficit narrowed, mainly due to growing exports of both goods and services."
The ONS said the quarterly figure highlights some signs of the economy "slowing", as UK GDP had grown at 1% since the equivalent quarter in 2018. It said this represented the greatest year-on-year slowdown since 2010.
The 0.3% growth rate was particularly driven by 0.4% growth reported in July, driven by strong manufacturing figures on the back of strength in the pharmaceutical sector.
Meanwhile, the services and construction sectors delivered growth throughout the quarter as they were boosted by seasonal trends.
Manufacturing output was flat for the period, as was overall production, following Brexit-driven volatility in the previous quarters.
ITV News correspondent Joanna Partridge points out: "Remember, we were due to have left the EU just before the release of today’s data.
"Manufacturing and production may have been flat in Q3 as firms brought forward activity to the first three months of the year - ahead of the first expected Brexit date at the end of March."
Elsewhere, an increase in UK-based film and TV production helped the information and communication industry to its sixth consecutive period of growth, as output increased by 0.8%.
Wholesale, retail and motor trades also saw a 0.3% increase in the quarter, accelerating from 0.1% in the previous period.
The ONS data dump also showed that the UK's trade deficit narrowed once again, falling by £F5 billion to £6.4 billion for the quarter.
What's the reaction to the figures been?
David Cheetham, chief market analyst at XTB, said the data “painted a not too pretty picture” of the state of the UK economy, as the manufacturing and industrial sectors performed worse than analysts expected.
He said: “While the positive GDP reading means that the UK has managed to stave off a recession for another year there is little doubt that the economy is spluttering, with political uncertainty and a slowdown in global activity clearly taking their toll.”
However, Ian Stewart, chief economist at Deloitte, said it was a “respectable performance” given recent economic pressure but was less positive about the economic outlook.
He said: “This is a pretty respectable performance given the headwinds from the global slowdown, protectionism and Brexit uncertainties.
Chancellor Sajid Javid said the figures were a “welcome sign” that the “fundamentals of the UK economy are strong”.
John McDonnell, Labour’s shadow chancellor, said: “Over the last year, growth slowed to its lowest rate in almost a decade.
“The fact that the Government will be celebrating 0.1% growth in the last six months is a sign of how low their hopes and expectations for our economy are.”
Sam Gyimah of the Lib Dems said: "The Conservatives are running on a platform of economic competence but we've now got growth figures that the last time the economy was growing at this rate was 2010.
Adding that it's "a sign that this Government is ruining the economy with its Brexit plans."