Business confidence hits lowest level in 2024

The UK economy recorded no growth during the third quarter of 2024, marking a significant revision from an earlier estimate of a 0.1% increase. This stagnation follows a previous growth of 1.4% in the prior quarter, indicating a sharp decline in economic activity shortly after the Labour government took office. The data, released by the Office for National Statistics (ONS), reveals troubling trends, including a 0.2% drop in real GDP per head compared to the same period last year. The sectors most affected include legal services and bars and restaurants, which struggled to perform as expected, contributing to the overall stagnation. This situation unfolds against a backdrop of declining consumer confidence and challenges within the Labour administration, which has been criticized for its budgetary decisions. Rachel Reeves, the Chancellor, has acknowledged the difficulties stemming from what she describes as 15 years of economic neglect under the previous Conservative government. The figures are particularly concerning as Labour had pledged to enhance living standards and deliver economic growth, making the reality of a stagnant economy a significant setback for Prime Minister Keir Starmer. Furthermore, the decline in business confidence is echoed in a Lloyds Bank survey, revealing a drop in optimism among businesses, particularly in the context of rising costs and pressures from increased national insurance contributions. Companies are bracing for a challenging 2025, with nearly 19% indicating plans to cut jobs and more than half considering price hikes for consumers. This mixture of stagnant growth, reduced household income, and declining business confidence signals a tumultuous period ahead for the UK economy. Overall, these developments illustrate that the anticipated economic recovery may remain elusive in the near term, complicating the Labour government’s strategy for economic reform and growth. As the economy flatlines, experts warn of a potential recession, with debate growing regarding how the challenges posed by higher interest rates and global economic conditions may further complicate the situation. Additionally, the CBI forecasts a steep decline in activity, while firms express lack of enthusiasm for hiring and investing, leading to an overall deterioration in prospects for economic stability.