London, Dec 23, V7N — The UK economy flatlined in the third quarter of 2024, according to revised figures released Monday by the Office for National Statistics (ONS), underscoring the significant challenges faced by the Labour government during its first months in office.

The ONS reported zero growth in GDP from July to September, downgrading the earlier estimate of a modest 0.1% expansion. This follows a downward revision of second-quarter growth from 0.5% to 0.4%, highlighting an increasingly sluggish economic environment.

The stagnation is a blow to Prime Minister Keir Starmer’s Labour government, which has been navigating a precarious economic recovery. Finance Minister Rachel Reeves acknowledged the scale of the challenge, stating, "The task to fix our economy and properly fund our public finances after 15 years of neglect is huge. But this only fuels our determination to deliver for working people."

Lingering Impact of High Interest Rates: Higher borrowing costs have dampened consumer and business spending.

Weaker Overseas Demand: Declines in export markets have hit the UK’s trade-dependent industries.

Pre-Budget Uncertainty: Concerns over tax hikes and increased state borrowing in the government’s October budget likely contributed to the cautious economic outlook.

Mixed Economic Signals

Despite the stagnant third-quarter figures, the Labour government’s fiscal plans aim to balance public finances while fostering growth. The October budget introduced measures to raise business taxes and expand state borrowing to invest in public services and infrastructure. However, critics warn that these policies may risk stifling growth in the short term.

Paul Dales, Chief UK Economist at Capital Economics, noted that "the economy ground to a halt in the second half of the year due to a combination of the lingering drag from higher interest rates, weaker overseas demand, and concerns over budget policies."

Outlook for 2024 and Beyond

The Labour government’s economic strategy will likely face scrutiny in early 2025 as policymakers grapple with the dual priorities of stabilizing growth and addressing public sector funding shortfalls. With inflation still a concern and consumer confidence fragile, the road to economic recovery remains steep.

Looking ahead, the government’s ability to implement long-term reforms while managing immediate economic challenges will be critical in restoring confidence among businesses and households alike.

END/BUS/RH