UK GDP report to show how economy fared in Labour government’s first quarter

Introduction: UK GDP report coming up

Good morning, and welcome to our rolling coverage of business, the financial markes and the world economy.

Keir Starmer and Rachel Reeves are about to get their first quarterly growth report since taking office, and it’s not expected to be sparkling.

At 7am GMT the first estimate of UK GDP for the third quarter of 2024 will be released, as well as for September alone.

Economists are expecting the economy grew by 0.2% in July-September, a relatively weak growth rate. That would be a slowdown on the 0.5% growth recorded in April-June, and the 0.7% in January-March.

If that happens, Labour’s gloomy talk since winning the general election in early July is likely to take some other blame. Warnings of a ‘painful’ budget hit confidence among both consumers and businesses, which will have a knock-on impact on spending, and investment decisions.

On the other hand, Reeves could well argue that a slow-moving economy justifies her push for growth – although the extra spending laid out in last month’s budget is only expected to give a short-term lift to economic output…

Previous data have shown that the UK economy stagnated in June and July, before returning to growth in August.

Sanjay Raja, chief UK economist at Deutsche Bank, says:

After a solid H1-24, UK growth over summer will likely slow. We expect Q3-24 GDP growth to slow to a more paltry 0.2% quarter-on-quarter.

We see September GDP, which will also be released as part of the GDP data dump, rising by 0.2% month-on-month. Risks are skewed higher on the quarterly print, but lower on the monthly September print, we think.

The agenda

7am GMT: First estimate of UK GDP for Q3 2024
7am GMT: First estimate of UK GDP for September 2024
7am GMT: UK trade balance for Q3 2024
8.30am GMT: Hong Kong’s GDP report for Q3 2024
9.30am GMT: UK productivity data for Q3 2024
1.30pm GMT: US retail sales for October

Key events

Bank of England governor says Brexit has undermined UK economy

Heather Stewart

Brexit has also been holding back the UK economy, the Bank of England governor warned last night as he urged ministers to “rebuild relations” with the EU.

Speaking at the Mansion House dinner in the City of London on Thursday evening, Andrew Bailey said he took no position on Brexit “per se”, but added: “I do have to point out consequences.”

He said Brexit had “weighed” on the economy, pointing out in particular the impact of Brexit on the UK’s trade in goods, adding:

“It underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people.”

Keir Starmer’s government has pledged to deepen cooperation with the EU, though Brussels has made clear it is unwilling to hold wide-ranging negotiations on the trade and cooperation agreement (TCA).

Labour is opposed to re-entering the EU’s single market or customs union. Instead, the government hopes to win more modest changes such as mutual recognition of professional qualifications and a veterinary agreement that could alleviate the need for checks on food exports.