Gross Domestic Product (GDP) is one of the most important economic indicators that reflect the health of the national economy. In the United Kingdom, GDP is used to measure economic production on a quarterly basis, and it is an important tool for understanding economic movements and future expectations. This indicator reflects the volume of economic activity and is a mirror of the state of the economy in a specific period of time..
UK GDP in the third quarter of 2024
According to official data issued by the Office for National Statistics in the United Kingdom, GDP in the third quarter of 2024 recorded a growth of 0.3%. This growth, although relatively low, shows the ability of the British economy to recover after the economic pressures it experienced in previous years.
Several main factors contribute to the growth in GDP, most notably domestic consumption, a slight increase in exports, and improvements in some productive sectors. For example, manufacturing and financial services were the most prominent drivers of growth in this quarter.
However, the British economy faced some challenges that affected growth. The most important of these challenges was high inflation.
which led to higher living costs and a decline in the purchasing power of British families. In addition, fluctuations in energy prices affected productivity in some industries, prompting the British government to adopt fiscal policies.
Local and global impacts on GDP
Local and global factors directly affect GDP. Domestically, the monetary policies adopted by the Bank of England contributed to controlling inflation and raising interest rates to contain rising prices. However, these policies also contributed to reducing economic activity in some sectors, which affected growth. Globally, the war in Ukraine and its repercussions on energy prices were one of the factors affecting GDP growth.
Quarterly National Accounts of GDP from April to June 2024
- UK GDP is forecast to grow by 0.5% in Q2 (April to June) 2024, revised downwards from the initial estimate of a 0.6% increase.
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- Following the previously announced revisions to growth in 2022, the forecast for GDP in 2023 is a 0.3% rise, revised upward from the initial estimate of a 0.1% increase, mainly due to updated data from the income approach to measuring GDP.
- In terms of output, the services sector grew by 0.6% in Q2 2024, with broad-based growth across the sector. This growth partly offset declines in both the production and construction sectors.
- Real household disposable income (RHDI) is expected to grow by 1.3% in Q2 2024, which is lower than the 1.6% growth in the previous quarter.
- The household saving rate is expected to reach 10.0% in Q4, increasing from 8.9% in Q1 2024.
Looking at the expenditure approach to measuring GDP, gross capital formation, government consumption, and household spending increased in Q2 (April to June) 2024, while net trade fell, partly offsetting the increase.
In gross capital formation, the largest contribution was from acquisitions minus disposals of valuables.
which saw a change of £9.6bn between Q1 and Q2 2024. This component consists mostly of non-monetary gold, which appears in net trade, making the impact neutral to GDP.
Notable revisions to household consumption in 2022 and early 2023.
There was a 0.2% increase in real household spending in Q2 2024, unchanged from the initial estimate. Within household consumption, the largest contributions to growth were from transport, housing and miscellaneous goods.
Net tourism contributed negatively to growth in the final quarter.
Information on how we measure net tourism is provided in our National Accounts article: Treatment of tourism in the UK National Accounts . Excluding net tourism, domestic consumption increased by 0.4% in the final quarter.
There were notable revisions to household consumption in 2022 and early 2023.
Consumption of government goods and services
Real government consumer spending grew by 1.1% in Q4, revised down from the initial estimate of 1.4%. The increase in government consumption in Q4 mainly reflects higher activity in public administration and defence, which offset the decline in health.
Over 2023 and 2024, government consumption will see adjustments mainly as a result of:
- Updated data for a number of components, including our annual health reference data.
where we collect more detailed information on services provided by the NHS
- Revisions to seasonal adjustment models
