Economy Avoids Recession But Annual Growth Rate Slowest Since 2010

Julie Palmer

Regional Managing Partner

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Economy Avoids Recession But Annual Growth Rate Slowest Since 2010

Updated: 5th April 2020

UK Avoids Recessions But Growth Still Slow

The UK economy has avoided recession by growing at a pace of 0.3 per cent in the third quarter of this year.

However, in terms of GDP, the annual growth rate was tracked at just 1 per cent nationwide at the end of Q3, which is slower than any pace recorded since 2010.

Before 2016 and the Brexit referendum, the economy was typically growing at a pace of around 2 per cent annually but expansion has been more difficult to come by in recent quarters.

Indeed, there had been fears that the economy would officially fall into recession by recording two consecutive full quarters of GDP contraction.

The three months to the end of June this year saw the economy shrink by 0.2 per cent, with that negative performance blamed in large part on the uncertainty around Brexit and the UK’s position in relation to the European Union.

Activity within the service sector was credited as being the driving force behind the third quarter growth recorded by the Office for National Statistics (ONS), which describes GDP as having grown “steadily” in the period.

"However, in terms of GDP, the annual growth rate was tracked at just 1 per cent nationwide at the end of Q3, which is slower than any pace recorded since 2010."

The ONS has said that performance in the economy overall was particularly strong during July, when it recorded notably strong manufacturing figures.

Meanwhile, the construction sector is described by the ONS as “performing well” in the third quarter and the automotive sector is said to have bounced back after slowing production for Brexit-related reasons earlier in the year.

Reflecting on the overall picture, Tej Parikh from the Institute of Directors said: “The UK economy has been in stop-start mode all year, with growth punctuated by various Brexit deadlines.”

The chancellor of the exchequer Sajid Javid welcomed the latest GDP figures as showing “solid” growth across the economy.

However, the shadow chancellor from the Labour Party John McDonnell has insisted that the relatively weak growth seen of late represents nothing much to celebrate.

“The fact that the government will be celebrating 0.1 per cent growth in the last six months is a sign of how low their hopes and expectations for our economy are,” he said.