American Invest Hub
  • Politics
  • Investing
  • Business
  • Latest News

American Invest Hub

  • Politics
  • Investing
  • Business
  • Latest News
Latest News

UK GDP shrinks: what it means for the economy and new government

by admin December 13, 2024
December 13, 2024
UK GDP shrinks: what it means for the economy and new government

The UK economy has unexpectedly contracted for the second consecutive month in October, a concerning development that highlights the economic challenges faced by the new Labour government led by Prime Minister Keir Starmer.

The latest figures from the Office for National Statistics (ONS) reveal a 0.1% decrease in Gross Domestic Product (GDP), following a similar decline the month before.

This downturn has defied economists’ expectations of a 0.1% gain, sending a ripple of concern through the markets and causing the pound to weaken.

This is particularly unsettling as it suggests a stalling of economic progress as the new government navigates the complex landscape.

Labour’s economic agenda faces early headwinds

The October contraction marks a difficult start for Labour, with the economy only showing growth in one of the four months since their landslide victory on July 4.

This shaky beginning presents a significant challenge to the party’s ambitious economic goals.

While Labour has pledged to improve living standards and achieve the highest sustained growth among G-7 nations, economists view this promise with skepticism given the current economic climate.

The latest data shows that the service sector, a major economic driver, remained flat for the second consecutive month, while both manufacturing and construction output declined, pointing to widespread weakness in various sectors.

Cooling job market and cost-of-living pressures

The new Labour administration is grappling with a multitude of economic headwinds.

The jobs market is cooling, mortgage and energy costs continue to rise, and businesses are considering passing on the impact of a substantial payroll-tax increase to consumers, possibly by raising prices or cutting jobs.

A recent survey also revealed that consumer confidence remains low in December.

The economy has stagnated since the election, adding to the pressure on the new government.

Furthermore, the potential for global trade disruptions stemming from a possible return of Donald Trump to the White House presents an additional challenge that could further weaken the global economy.

Consumer spending declines amidst budgetary fears

A significant factor contributing to the economic downturn was a notable decline in consumer-facing services, which saw a 0.6% drop in output.

The leisure sector was particularly affected, with pubs and restaurants experiencing a 2% decline, indicating that households have likely tightened their spending in anticipation of a potential squeeze from the budget.

Despite the bulk of the £40 billion ($50.6 billion) tax hikes eventually being placed on businesses rather than consumers, the initial anxiety seemed to have curbed spending in October.

Government acknowledges disappointment, pledges growth

Chancellor Rachel Reeves acknowledged the disappointing figures in a statement, affirming the government’s resolve to “deliver economic growth as higher growth means increased living standards for everyone.”

The sharp slowdown in the economy since Starmer assumed office, evidenced by a mere 0.1% expansion in the third quarter after a remarkable 1.2% surge in the first half, raises concerns about the fourth quarter as a whole.

While current forecasts suggest growth of 0.3% to 0.4%, to continue over the next two years, the October contraction will raise questions over these predictions.

The post UK GDP shrinks: what it means for the economy and new government appeared first on Invezz

0
FacebookTwitterGoogle +Pinterest
previous post
USD/INR forecast: rare pattern points to India rupee comeback
next post
German exports tumble, raising concerns about economic recovery

Related Posts

Rare lunar event may reveal Stonehenge’s link with...

May 23, 2024

Netanyahu may be forced to choose between his...

June 5, 2024

Heading platoons, repairing machines and doing twice as...

March 10, 2024

Australian state orders 30,000 people to evacuate due...

February 29, 2024

China is sending its highest-level delegation to North...

April 12, 2024

Israel says aid to Gaza is ramping up...

April 14, 2024

How to help Hurricane Beryl victims

July 4, 2024

Marine Le Pen convicted of EU fund embezzlement,...

March 31, 2025

Despite scenes of defiance, plenty of Russians support...

March 13, 2024

Eurozone business activity contracts in September, raising recession...

September 24, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • Interview: Strategic location gives Brazil Potash cost advantage in domestic fertiliser market, says CEO Matt Simpson

      June 1, 2025
    • Canada’s Q1 GDP expands by 2.2%, driven by exports spike ahead of potential US tariffs

      June 1, 2025
    • President Trump to host farewell for Elon Musk as DOGE leader steps away

      June 1, 2025
    • UK’s digital banks face divergent fortunes: Starling stumbles, Monzo and Revolut soars

      June 1, 2025
    • Trump wants Apple to shift iPhone production from India to the US: here’s what it means

      May 18, 2025

    Categories

    • Business (3,032)
    • Investing (2,462)
    • Latest News (1,994)
    • Politics (1,530)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: americaninvesthub.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 americaninvesthub.com | All Rights Reserved