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IEA - Growth fizzles out as the Budget looms
Julian Jessop, Economics Fellow at the free market think tank the Institute of Economic Affairs Comments on yesterday’s GDP figure
“The latest news on the UK economy confirms that the apparently strong growth in the first half of the year has already fizzled out. The monthly data are not very reliable, but it is still striking that GDP fell (before rounding) in every month of the third quarter.
“The 0.1% monthly fall in UK GDP in September was due in part to the disruption at Jaguar Land Rover – if manufacturing of motor vehicles had been flat rather than slumped by 28.6%, GDP would have risen by 0.1%. However, that would still have been a feeble rate.
“More timely business surveys suggest that manufacturing recovered in October, led by the restart at JLR. But overall GDP growth is still likely to have been subdued, mainly due to pre-Budget uncertainty.
“It is still possible that the Budget itself is not as bad as feared, or at least that uncertainty eases sufficiently to allow some hiring and investment to resume. The reaction in the bond markets will also be crucial.
“For now, though, everything appears to be on hold.”
