By CNBC (Business) | Created at 2024-11-15 07:21:07 | Updated at 2024-11-22 19:19:33
1 week ago
Bank of England in the City of London on 6th November 2024 in London, United Kingdom. The City of London is a city, ceremonial county and local government district that contains the primary central business district CBD of London. The City of London is widely referred to simply as the City is also colloquially known as the Square Mile. (photo by Mike Kemp/In Pictures via Getty Images)
Mike Kemp | In Pictures | Getty Images
The U.K. economy grew less than expected in the third quarter of the year, showing only marginal growth following a rebound at the start of the year, initial figures showed Friday.
Gross domestic product came in at 0.1% in the three months to September compared to the previous quarter. That's below the 0.2% growth expected by economists polled by Reuters and follows an expansion of 0.5% in the second quarter of the year.
GDP increased by 1% in the third quarter compared to the same period a year ago, in line with an estimate of 1% year-on-year growth.
It comes after inflation in the U.K. fell sharply to 1.7% in September, dipping below the Bank of England's 2% target for the first time since April 2021. The fall in inflation helped pave the way for the central bank to cut rates by 25 basis points on Nov. 7, bringing its key rate to 4.75%.
The Bank of England said last week it expects the Labour Government's tax-raising budget to boost GDP by 0.75 percentage points in a year's time. Policymakers also noted that the government's fiscal plan had led to an increase in their inflation forecasts.
The outcome of the recent U.S. election has fostered much uncertainty about the global economic impact of another term from President-elect Donald Trump. While Trump's proposed tariffs are expected to be widely inflationary and hit the European economy hard, some analysts have said such measures could provide opportunities for the British economy.
Bank of England Governor Andrew Bailey gave little away last week on the bank's views of Trump's tariff agenda, but he did reference risks around global fragmentation.
"Let's wait and see where things get to. I'm not going to prejudge what might happen, what might not happen," he told reporters during a press briefing.
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