Uk Falls Off The Top Of The G7 Growth Leaderboard

18th November 2024

GDP growth slowed to 0.1 per cent in the third quarter of 2024, leaving the UK falling below the US in terms of growth across G7 economies, the Resolution Foundation said in response to the latest ONS data.

Following a recession in the second half of 2023, the UK economy bounced back in early 2024, recording GDP growth of 1.2 per cent over the first half of 2024. This meant that, for six months at least, the UK had the fastest growing economy in the G7.

But Britain's GDP rebound has already run out of steam, with GDP slowing to 0.1 per cent in the third quarter of 2024. The slowdown was driven by a sharp slowdown in the UK’s powerhouse services sector (which grew 0.1 per cent, following 0.6 per cent growth last quarter) and a further fall in manufacturing output (down 0.1 per cent, after a 0.2 per cent fall in the last quarter).

This slowdown puts growth over the first three quarters of the year at 1.3 per cent, behind the US (1.9 per cent) but ahead of France and Italy (0.8 per cent and 0.4 per cent), with Canada set to stay just behind the UK based on current forecasts. Consistent with the slowing in GDP growth, recent ONS data has also showed that wage growth is slowing, and that there has been no increase in payrolled employment over the past five months, after a strong start to the year.

The Foundation adds that GDP-per-capita - which better matches changes in real household disposable incomes – fell to £9,250 in Q3 2024 and remains 0.7 per cent below its level at the end of 2019.

Simon Pittaway, Senior Economist at the Resolution Foundation, said, "After bouncing back from recession earlier this year, Britain’s recovery is already running out of steam. The UK has fallen below the US at the top of the G7 GDP growth leaderboard, with growth slowing, wage rises shrinking and employment starting to fall.

"The UK has been a GDP rollercoaster over the past 12 months, but its medium-term performance has been staid and stagnant. Over the past five years, the economy has shrunk by 0.7 per cent once you account for population growth.

“This all serves to highlight that the Government’s mission to renew strong economic growth is both extremely hard, and absolutely necessary."