UK economy stagnates as high borrowing costs hit activity


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The UK economy stagnated in the three months to September according to official figures that highlight the challenge facing chancellor Jeremy Hunt as he seeks to revive growth in his upcoming Autumn Statement.

Gross domestic product was unchanged in the third quarter compared with the previous three months, data published by the Office for National Statistics showed on Friday. This was down from a 0.2 per cent expansion in the previous three months, suggesting that high borrowing costs are taking a toll on activity and the cost of living crunch is still hitting household spending.

The figure was marginally better than the 0.1 per cent contraction forecast by economists polled by Reuters, but was in line with the Bank of England’s expectations. The Bank forecasts that the economy will be flat in 2024.

Output rose 0.2 per cent month on month in September, the ONS data showed, stronger than analysts’ expectations of no change.

The data comes ahead of the Autumn Statement on November 22 in which Hunt will lay out plans to boost economic growth.