The UK economy has shown sluggish growth, and a slight rebound in data cannot mask the overall weak. performance for the whole year.
After two consecutive months of contraction, the UK economy finally showed some signs of growth momentum in November of last year. Data released by the UK's Office for National Statistics on the 16th showed that the UK economy grew by 0.1% month-on-month in November, following contractions of 0.1% in both September and October. Although this growth figure was lower than market expectations, it still provided some comfort to the struggling Labour government. In response to the latest growth data, UK Chancellor of the Exchequer Rachel Reeves stated, "We are determined to further accelerate the pace of economic growth and work hard every day to put more money in the pockets of working people." However, some research institutions and opposition parties found the data hard to satisfy and did not view it as a turning point for economic growth.
Although the UK's economic momentum has initially emerged, it has not changed the overall stagnant situation of its economic growth. Despite some growth in November, the UK economy showed zero growth in the three months to November. Previously, the Bank of England had expected the UK economy to also show zero growth in the fourth quarter of last year. It has become a basic consensus among research institutions that the UK economy stagnated in the second half of last year.
"The UK government needs to focus more than ever on driving growth. Some negative comments from the government have undermined confidence in the UK economy for the second half of 2024. What we need now is a consistent and positive message to promote growth. The Chancellor's speech and industrial strategy, expected at the end of this month, could be important opportunities to boost investment and growth," said Anna Leach, Chief Economist at the Institute of Directors (IOD), a think tank.
However, what the UK government may need to do more is to promote business investment and restore consumer confidence, which is not easy. A survey by the Confederation of British Industry (CBI) shows that under the new fiscal arrangements, taxes for UK business owners will increase and the minimum wage for employees will rise, posing significant pressure on entrepreneurs' operations. In response to the latest fiscal policies, private businesses in the UK will have to cut back on investment and reduce their workforce, thereby stifling the economy.
"Our latest forecast is that UK GDP will recover slightly in 2025 and 2026, but this will mainly be driven by increased government spending. Currently, UK businesses are struggling to cope with the additional costs imposed by the fiscal budget. There is an urgent need to see the government take action to ease the cost pressures on businesses and stimulate investment," Stuart Morrison said.