The UK’s economic growth slowed down in the third quarter, according to official data released on Thursday. The country’s gross domestic product (GDP) grew by 0.1% in the July-September period, which is lower than the 0.3% growth recorded in the second quarter. This slowdown is a blow to the Labour government ahead of its annual budget, scheduled for November 26.
The Office for National Statistics (ONS) reported that the growth figure is below the analysts’ consensus forecast of 0.2% for the third quarter. The UK’s economy has been struggling to gain momentum, with the latest quarterly figure being well below the 0.7% growth recorded in the first three months of the year.
The weak growth has been attributed to various factors, including higher taxes and weak exports. The finance minister, Rachel Reeves, has indicated that taxes could rise on some salaries in the upcoming budget to help drive down government debt and fund public services. This decision has been criticized by many analysts, who blame the weak growth largely on the increase in business taxes introduced in the previous budget.
The latest data also showed that the UK’s unemployment rate rose to 5.0% in the third quarter, exceeding expectations. The ONS director of economic statistics, Liz McKeown, noted that growth slowed further in the third quarter, with both services and construction weaker than in the previous period. A cyberattack on carmaker Jaguar Land Rover also impacted the manufacturing sector, resulting in a 0.1% contraction in September.
In response to the data, Reeves stated that there is more to do to build an economy that works for working people. She added that she will make fair decisions to build a strong economy in the upcoming budget. The Bank of England has left its key interest rate unchanged, despite annual inflation being above the central bank’s 2% target. However, the weak growth data may lead to a rate cut in December, according to some economists.
The UK’s economic slowdown has significant implications for the government’s budget and its ability to deliver on its promises. The upcoming budget is expected to outline measures to boost economic growth and address the country’s debt. As the government prepares to present its budget, it will need to balance the need to drive down debt with the need to support economic growth and create jobs. The outcome of the budget will be closely watched by investors, businesses, and citizens, as it will have a significant impact on the country’s economic future.