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Lancashire Times
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8:58 AM 16th January 2025
business

Disappointing Growth Leaves Door Open To Stagflation Concerns

ONS data that showed GDP rose by 0.1% in November 2024, following a decline in GDP of 0.1% in October.

Anna Leach, Chief Economist at the Institute of Directors, said:
“The UK returned to meagre growth in November, driven by accommodation and food, ICT and wholesale trade. While welcome, this is a slower pace than expected: in the second half of 2024, four out of five months have seen growth come in below expectations. November coincided with a new post-Covid low for the IoD’s Economic Confidence Index as business leaders were left reeling from a worse-than-expected Budget for business. The economy now seems likely to have ground to a halt over the second half of 2024.

“It is more urgent than ever for government policy to be focussed on driving up growth. The government’s negative rhetoric snuffed out confidence and growth in the second half of 2024: we now need relentlessly positive pro-growth messaging. This then needs to be accompanied by meaningful, measurable progress in the delivery of this year’s policy ambitions. Pro-growth regulation, the Chancellor’s expected speech at the end of the month, Industrial Strategy and tax simplification announcements are important opportunities this spring for the government to demonstrate its commitment to driving up investment and growth. Planning reform also presents a huge opportunity to unblock growth.”

Full results

601 responses from across the UK, conducted between 15-27 November 2024. 14% ran large businesses (250+ people), 20% medium (50-249), 26% small (10-49 people), 30% micro (2-9 people) and 11% sole trader and self-employed business entities (0-1 people).

How optimistic are you about both the wider UK economy and also your organisation over the next 12 months?

Very optimisticQuite optimisticNeither optimistic nor pessimisticQuite pessimisticVery pessimisticDon't know
Wider UK economy1.2%8.3%15.3%47.1%27.8%0.3%
Your (primary) organisation3.7%25.6%33.8%28.5%8.2%0.3%




Ben Jones, CBI Lead Economist said:   

“After a string of disappointing data, it’s good to see that growth returned to positive territory in November, though the economy is still only on track for a very modest expansion at best over the final quarter of last year. In the wake of the Autumn Budget a mood of caution seems to have settled over UK businesses. Many firms are entering 2025 with a focus on reducing operational expenditure, which is likely to weigh on pay, hiring and investment in the months ahead.

“The Government can help shift the UK’s economic narrative with more determined focus on measures that could underpin growth. Reforming the business rates system, implementing flexibility in the Apprenticeship Levy and supporting people to stay in work through expanding employer occupational health provision would give businesses immediate flex for investment. In the long-term there is a pressing need to develop an effective industrial strategy that supports our whole economy.”


Stuart Morrison, Research Manager at the British Chambers of Commerce, said:

“With no growth in the three months to November 2024, and a very limited uptick for the month itself, it's clear that the UK economy continues to be stuck in a worrying rut.

“Our latest forecast expects GDP to pick up slightly in 2025 and 2026, but this is driven largely by increased government spending. Right now, firms are struggling to deal with a raft of extra costs following the Budget. Investment levels are likely to remain low for the foreseeable future, as businesses try to balance their books.

“We urgently need to see government action to ease cost-pressures and spark investment. Ministers should focus on business rates reform, infrastructure projects and promoting trade to unlock economic growth.”