United Kingdom economy avoids recession with 0.3% Q3 growth

UK GDP optimism has bumped up the pound

Pedestrians walk past retail outlets and shops on Carnaby Street in London.

Britain's Brexit-facing economy avoided entering recession in the third quarter with growth of 0.3 per cent, official data showed today. "Output then fell back in August and September, which points to a lack of momentum in the economy going into the fourth quarter".

Predictions by the Bank of England and National Institute of Economic and Social Research ahead of the publication forecast growth of 0.4% and 0.5% for the quarter.

Commenting on Monday's release, David Cheetham at XTB said: "While the positive GDP reading means that the United Kingdom 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".

A recession is defined as two consecutive periods of economic decline.

Chancellor Sajid Javid tweeted: "Great to see solid Q3 growth - another welcome sign fundamentals of United Kingdom economy are strong".

Growth in the United Kingdom economy has slowed to its lowest rate in nearly a decade, the Office for National Statistics said. This was weaker than the eurozone, which grew by 1.1 per cent. A government outlook had projected year-to-year growth of 1.3 percent. For 2020, the BoE expects a slowdown to 1.3 per cent.

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Britain is scheduled to leave the European Union at the end of January, following a three-month extension granted last month. "The BoE forecasts an investment rebound if a Brexit deal removes no-deal risk but we think this is optimistic", said Nancy Curtin, chief investment officer at Close Brothers.

But his Labour counterpart John McDonnell said: "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". Household spending, which has been more resilient than business investment, due to low unemployment and rising wages, rose by 0.4% on the quarter. Manufacturing, the largest sub-sector of production, also was flat in the three months to September.

And despite rebounding growth, the ONS pointed to "signs" of a slowdown, as Britain readies to leave the European Union on January 31.

It shrank by 0.2% in the three months to June 2019, as businesses dealt with the fallout of stockpiling after Brexit was delayed from its first deadline in March.

Some retailers also said bad weather had hurt demand too, the ONS added.

They also show however that year-on-year GDP growth slowed to 1%, its weakest since 2010, in the three months to the end of September.

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