UK GDP flatlined in the July-September quarter, ONS reports, as companies warn October budget has hurt economy too

• Sharp fall in UK business activity forecast as economic gloom deepens

Chancellor Rachel Reeves has warned that the goverment faces a “huge” challenge to fix the UK economy.

Reacting to this morning’s news that the economy failed to grow in July-September, Reeves says:

“The challenge we face to fix our economy and properly fund our public finances after 15 years of neglect is huge.

“But this is only fuelling our fire to deliver for working people.

This leaves plenty of scope for a lively debate with the family over the festive period about whether or not the economy is heading for a recession.

Overall, these data suggest that after a bumper first half of the year, the economy ground to a halt in the second half of the year due to a combination of the lingering drag from higher interest rates, weaker overseas demand and some concerns over the policies in the Budget.

Our hunch is that 2025 will be a better year for the economy than 2024. But more recent data suggest the economy doesn’t have much momentum as the year comes to a close.