According to official figures, the British economy is growing at the slowest pace in this decade.
Year-on-year growth in the three months to end-September slowed to 1% from 1.3% in the second quarter, says National Statistics office.
An ONS spokesman says, “Looking at the picture over the last year, growth slowed to its lowest rate in almost a decade.”
But the economy avoided a recession by growing 0.3 percent in the third quarter.
The economy had shrunk in the second quarter and two-quarters of contraction would have signaled a recession.
What happened in the three-month period?
Bank of England economists and their counterparts predicted that the depreciation would be 0.4 percent, but in fact, the depreciation was 0.3 percent.
ONS statisticians say that GDP has grown sharply in the third period, and this was due to strong July earnings.
What happened in September?
It was projected to fall 0.1 percent of GDP in September, and so it did.
It was the growth of 0.3 percent in July and that drove the economy in the whole of the third quarter.
John Hawksworth, the chief economist at PwC, says, “The fact that growth was positive in the third quarter is largely due to a strong July.”
“Output then fell back in August and September, which points to a lack of drive in the economy going into the fourth quarter.”
How did the different parts of the economy perform?
As the ONS statistics tell us, services led the way again with construction also performing well.
“Manufacturing didn’t grow, as falls in many industries were offset by car production bouncing back following April shutdowns.”
As the ONS says, since May the construction sector showed its first growth in three months.
Production did not change until September, and growth was not observed after April to September.
Suren Thiru, head of economics at the British Chambers of Commerce, said that the main driving force behind the growth was the dominant services sector in the quarter, including the industrial and construction sectors, and this helped slightly to boost UK GDP.
What does it tell us about the economy?
Ruth Gregory, a British economist, says that while the economy avoided a recession in the third quarter, the economy was “pretty soft”.
Tej Parikh, an economist at the Institute of directors says, “a return to growth is good news, but narrowly avoiding a recession is nothing to celebrate”.
“The United Kingdom’s economy has been in stop-start mode all year, with growth punctuated by the various Brexit deadlines,” he added.
Ms. Gregory says, “While the election was five weeks ago, this isn’t the good news the government might have hoped for.”
Was Brexit stockpiling important?
In the second quarter, the economy declined by 0.2 percent -from March to June- when Brexit stockpiles were unwound after the first Brexit date of 29 March.
Samuel Tombs, an economist at Pantheon Macroeconomics, said a “renewed stockpiling boost” failed to materialize in the third quarter.
“It is possible that stockpiling has occurred to a bigger extent at the start of the fourth quarter,” he says, adding the fourth-quarter growth may not slow down as we might expect.
But Mr. Parikh said, “the final quarter of 2019 could be weaker as stockpiles continue to be run down”.
What are the politicians saying?
The Chancellor, Sajid Javid, said their figures were “another welcome sign that the fundamentals of the United Kingdom economy are strong. Under the conservatives, we’ve seen nine consecutive years of growth”.
He says, “It also shows that the real risk to growth in our economy is Corbyn’s Labour. If they get their way, two referendums in 2020, eye-watering amounts of spending and borrowing and debt, that kind of economic vandalism will bring growth in this country to a halt.”
Growth was 0.3 percent from July to September, that is good, but it is still slower. There is indeed growing in the third quarter of this year; however, it is not enough after such a crisis. The background is a slower European and world economy reeling from trade wars.
But years of damaged business investment, after the Brexit referendum, are taking their toll on growth.
So recession avoided, but this is not the “bounce back” promised by some.