Economic Growth in United Kingdom
The United Kingdom's GDP growth from 2013 to 2022 was impacted by Brexit uncertainties and the COVID-19 pandemic. Early in the decade, the economy experienced steady, though moderate, growth. The Brexit referendum in 2016 introduced prolonged economic uncertainty, affecting investment and growth. The pandemic caused a historic contraction in 2020, but a strong recovery followed in 2021-2022, albeit with ongoing challenges from Brexit-related trade disruptions and soft global economic conditions.
The United Kingdom recorded an average real GDP growth rate of 1.7% in the decade to 2022. This is slightly below the 1.8% average for major economies. In 2022, real GDP growth was 4.3%. For more GDP information, visit our dedicated page.
United Kingdom GDP Chart
United Kingdom GDP Data
|Economic Growth (GDP, ann. var. %)||1.4||1.6||-10.4||8.7||4.3|
|GDP (USD bn)||2,870||2,850||2,699||3,141||3,087|
|GDP (GBP bn)||2,152||2,234||2,104||2,284||2,506|
|Economic Growth (Nominal GDP, ann. var. %)||3.4||3.8||-5.8||8.5||9.7|
Economy flatlines in Q3
GDP was flat on a seasonally adjusted quarter-on-quarter basis in the third quarter, below the 0.2% expansion recorded in the second quarter and in line with our panelists’ expectations. Q3's reading marked the worst reading since Q3 2022. On an annual basis, economic growth clocked 0.6% in Q3. Looking at a monthly picture, the economy expanded in August and September following a sharp contraction in July that was partly due to industrial action in the health, education and transport sectors.
Private consumption contracted 0.4% in Q3 (Q2: +0.4% s.a. qoq). Public consumption shrank 0.5% in Q3 (Q2: +2.5% s.a. qoq). Fixed investment contracted 2.0% in Q3 (Q2: +0.8% s.a. qoq). Exports of goods and services rose 0.5% in seasonally adjusted quarter on quarter terms in the third quarter, which marked the best reading since Q3 2022 (Q2: -0.9% s.a. qoq). In addition, imports of goods and services deteriorated, contracting 0.8% in Q3 (Q2: +2.2% s.a. qoq).
Our Consensus is for another flat GDP reading in Q4, with the economy weighed on by tight financial conditions at home and a likely muted export performance.
On the outlook, Berenberg analysts said: “Although the UK growth potential has slowed over the past two decades, private sector balance sheets have become much stronger as banks, households and businesses have fixed the cracks and holes that had left the UK so exposed to the 2008 financial meltdown. With strong balance sheets that provide a buffer to shocks, it would not be a major surprise if the UK adjusts to higher interest rates without falling into recession. […] After a flat H2 2023, we expect a gradual pick-up of momentum through 2024 from a qoq rate of 0.2% in Q1 to a trend rate of c0.4% by Q4.” In contrast, Nomura economists are more pessimistic: “GDP growth came in flat for Q3 2023, leading to us pushing back and diminishing our forecast for a UK recession. We now see a two-quarter recession beginning in Q4 2023, with a total contraction of 0.3%.”
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects British GDP projections for the next ten years from a panel of 59 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for British GDP.
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