The UK economy’s growth has significantly slowed, with the latest data from the Office for National Statistics (ONS) revealing a mere 0.1% increase for the July-to-September period. This is a significant slowdown from growth of 0.3% in the last quarter. This is a sharp reversal from the 0.7% growth seen during the first quarter of the year. Analysts had been expecting a flat growth rate of 0.2%, highlighting a lackluster showing in the face of such tumultuous economic headwinds.
The recent cooling of economic activity was reflected in a contraction for September, where the economy contracted by 0.1%. This slump has been blamed, at least in part, on a steep drop in carmaking, which the ONS said was “notable.” This fall, a cyber-attack on Jaguar Land Rover (JLR) stormed through the firm, bringing production to a standstill. This hack was instrumental in ruining the company’s reputation and production output.
Ruth Gregory, deputy chief UK economist at Capital Economics, stated that the economy “is struggling to gain decent momentum,” reflecting concerns about the sustainability of growth amid these challenges. The result, she cautioned, is a pretty shady economic picture, calling into question the economy’s ability to perform in the future.
Suren Thiru is economics director at the Institute of Chartered Accountants in England and Wales. He emphasized that these most recent numbers could go a long way in shaping future monetary policy. He suggested they may be sufficient “to push a majority of rate-setters to authorise another policy loosening,” indicating potential changes in interest rates as a response to the current economic climate.
Industries like business rental and leasing, live events, and retail were positively impactful to growth in this period. Liz McKeown from the Center for Neighborhood Technology pointed out that services were responsible for most of the growth. This growth was largely offset by losses from the contraction of research and development activities and hair and beauty salons.
Political reactions to the economic data were quick and telling. Mel Stride, the Conservative shadow chancellor, lambasted the administration for lack of accountability. Afterwards, he famously remarked that the prime minister and chancellor were “in office but not in power.” He accused Sir Keir Starmer of having “stripped the chancellor of responsibility for the Budget,” further complicating the government’s fiscal credibility amid these economic challenges.
The experience raises troubling issues over the administration’s approach to governance in the future. As Rachel Reeves stated, there remains “more to do to build an economy that works for working people.” She reiterated her pledge to make the right choices with greatest impact. Her vision centers on building a robust economy that tackles challenges such as waiting lists, the national debt, and the cost of living.