It means the UK economy grew by just 0.1% in the July-to-September period, well below analysts’ expectations of 0.2%. At 0.1%, this growth represents a slowdown from the previous quarter’s rate of 0.3%. It’s more than a rounding error too—an even bigger change than that 0.7% growth we experienced in the first three months of the year. Yet, in September, their economy contracted by 0.1%. This decrease was only marginally offset by falling car production, which was impacted by a major cyber attack on Jaguar Land Rover’s (JLR) systems.
The Office for National Statistics (ONS) was responsible for publishing these statistics. In short, they demonstrate just how difficult it is for the economy to gain any real momentum, even in the absence of the JLR cyber-attack drag. Ruth Gregory, an economist, commented on the situation, stating that “the economy is struggling to gain decent momentum.”
Today’s report showed that the production in the manufacturing sector — especially for the production of cars — suffered a significant drop in September. Some experts argue that this surprise setback has more than enough weighed down total GDP growth for the quarter. According to Suren Thiru, the figures may influence monetary policy decisions moving forward, potentially leading “a majority of rate-setters to authorise another policy loosening.”
Even with these impediments, there were a number of other economic bright spots. That’s not just good news, Liz McKeown pointed out, services were the largest driving sector for that growth in this most recent quarter. The business rental and leasing, live performance events, and retail sectors showed tremendous strength. Unfortunately, this strength was counterbalanced by major losses in research and development (R&D) as well as personal care services like hair and beauty salons.
Political reactions to these alarming economic indicators have been polarized. New Conservative Treasury Secretary Mel Stride goes one further, condemning what he describes as “cavalier government leadership.” He said that Prime Minister Rishi Sunak and Chancellor Jeremy Hunt were “in office but not in power.” He further asserted that Sir Keir Starmer had effectively “stripped the chancellor of responsibility for the Budget,” highlighting concerns over fiscal management during this critical period.
Even Rachel Reeves, when challenged by the cost-of-living crisis, recognized the space to do more. She stated, “there’s more to do to build an economy that works for working people.” We’re looking forward to the budget Reeves will deliver next month that puts maintaining a strong economy first. This budget will address urgent priorities such as long waiting lists, national debt, and the high cost of living.
Even as the UK continues to feel the effects of these economic storms, analysts are cautiously optimistic about increased prospects for recovery. The contradictory signals from industries across the economy highlight the conflicting pressures and uncertainty in today’s premium given the macroeconomic context. With critical policy decisions on the near horizon, stakeholders at every level will be watching closely as these events play out.