Accountancy sector bucks trend as GDP falls by 0.3%

Accountancy sector bucks trend as GDP falls by 0.3%

Dec 15, 2023

Growth figures for the last quarter were flat as GDP fell by 0.3% in October, signalling signs of a ‘sinking economy’, although the accountancy sector performed strongly

GDP contracted by 0.3% for October, following growth of 0.2% growth in September, with figures for the quarter flatlining with no growth, showed the latest figures from the Office for National Statistics (ONS).

The services sector fell 0.2% overall with consumer-facing services falling 0.1%. This backtracked from 0.2% growth in September. Within that the information and communications (ICT) sector was the worst performing sector, down 1.7%.

One bright spot in the figures showed that the accountancy sector grew by 5.1% in October, up 4.1% on the previous year.

Julie Matheson, accounting industry regulatory partner at Kingsley Napley said: ‘The accounting industry is doing well in spite of continuing economic and market pressures.

‘October’s figures are indicative of this resilience despite the many challenges firms are currently seeking to navigate.’

The impact of high interest rates on property sales had an inevitable impact on the construction sector, which was down 0.5% in October after a 0.4% rise the previous month. This could have been impacted by the weather in October, the ONS said, after the Met Office recorded the most rain fall over a three-day period ever, as well as very strong winds.

One of the worst performing sectors was professional, scientific, and technical, down 0.7% with five of the eight sub-industries seeing a decline.

Dr Roger Barker, director of policy as the Institute of Directors said: ‘There is very little comfort in the latest GDP figures. The emerging picture is one of a sinking economy. The possibility that we will move into recession next year has increased.

‘Although the labour market remains tight, the emerging economic picture points to a need for the Bank of England to start cutting interest rates sooner rather than later. We hope that it does not delay its policy response too long as it did at the beginning of the current cycle.’

There are concerns that the lack of growth will lead to the economy stagnating.

Susannah Streeter, head of markets at Hargreaves Lansdown said: ‘Across the three months, output was flat, with the contraction cancelling out the better-than-expected performance in September.

‘The UK is still mired deep in stagnation territory and a fast rebound looks unlikely, particularly given that interest rates are set to be kept on hold tomorrow, prolonging the pain for borrowers.

‘However, it does increase the likelihood that the Bank of England might cut rates earlier than forecast, although it’s still not likely until the second half of next year, given that wage increases, although slowing, are still strong.’