UK Economy Records Zero Growth in Q3 Amid High Interest Rates and Inflation

Services sector contracts as rising interest rates hit housing industry; Bank of England anticipates minimal growth in 2024 and early 2025.

Amid high interest rates designed to combat inflation, the UK economy recorded no growth in the Q3. While the services sector contracted, particularly impacting the housing industry, some of the decline was offset by repairs in the construction sector.
The Bank of England predicts GDP will only increase by 0.1% in the last quarter of the year, with no growth anticipated throughout 2024 and early 2025. Notably, the central bank estimates less than half of the full effect of the higher rates has come into play.
The stagnation of the UK economy reflects a similar trend in other European economies, with the Eurozone economies contracting by 0.1% in the same period.
The National Institute of Economic and Social Research predicts that around five million people in lower income groups won’t see their living standards return to pre-pandemic levels until 2026.
Though the Chancellor of the Exchequer, Jeremy Hunt, has a plan to bolster the economy via private investments and encouraging more work, substantial changes to taxes or spending are not expected.