The United Kingdom’s economic growth slowed markedly in the third quarter, according to official data released on Thursday. Gross domestic product (GDP) rose by only 0.1 % in the July‑September period, down from the 0.3 % expansion recorded in the second quarter and well below the analysts’ consensus forecast of 0.2 % for the quarter. This figure also trails the 0.7 % growth seen in the first three months of the year, underscoring the economy’s struggle to regain momentum.
The Office for National Statistics (ONS) attributed the weak performance to a combination of higher taxes and soft export demand. The finance minister, Rachel Reeves, has signalled that some salaries could face higher taxes in the upcoming budget as a means of reducing government debt and funding public services. Analysts have criticised this approach, arguing that the increase in business taxes introduced in the previous budget is a major factor behind the sluggish growth.
Unemployment also rose, with the ONS reporting a 5.0 % rate in the third quarter, exceeding expectations. Liz McKeown, the ONS director of economic statistics, noted that growth slowed further across both services and construction, while a cyber‑attack on carmaker Jaguar Land Rover contributed to a 0.1 % contraction in manufacturing in September.
In response, Reeves said more must be done to build an economy that works for working people and pledged to make “fair decisions” in the forthcoming budget to strengthen the economy. Meanwhile, the Bank of England has kept its key interest rate unchanged despite annual inflation remaining above its 2 % target; however, some economists suggest the weak growth data could prompt a rate cut in December.
The slowdown has significant implications for the government’s budget and its ability to fulfil policy promises. The upcoming budget, scheduled for November 26, is expected to outline measures aimed at boosting growth, tackling debt, and supporting job creation. Investors, businesses and citizens will be watching closely, as the budget’s outcomes will shape the country’s economic future.
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