UK economy latest: Growth slower than expected at 0.1% ahead of crucial Reeves Budget

Office of National Statistics director of economic statistics Liz McKeown has said that growth was impacted by a fall in car production, as a result of the JLR cyber attack.

She said: “Growth slowed further in the third quarter of the year with both services and construction weaker than in the previous period.

“Across the quarter as a whole manufacturing drove the weakness in production.

“There was a particularly marked fall in car production in September, reflecting the impact of a cyber incident, as well as a decline in the often-erratic pharmaceutical industry.”

Liberal Democrat Treasury spokesperson Daisy Cooper MP said: “This is a damning indictment of Labour’s disastrous decisions.

“From the jobs tax to business rates bills, the economy is barely spluttering along.

“The chancellor must take up our plans for an emergency package to save our high streets, put money back in the pockets of families and finally fix our broken relation with Europe to bring in billions for our public services.”

Concerns over a slowdown growth have led to predictions from economists that the Bank of England will cut interest rates next month, to 3.75 per cent, and could cut rates deeper than previously expected.

Policymakers will also look at the latest inflation data, which will be released next week, when they assess the next vote on interest rates.

The 0.1 per cent growth is slower than experts predicted, after they already suggested it would slow down in the third quarter.

Experts predicted that the Office for National Statistics would report 0.2 per cent growth over the three months to September in their latest update on Thursday morning.

It will represent a slowdown after 0.3 per cent in the previous quarter, continuing a notable drop-off after a 0.7 per cent rise in the first three months of the year.

The UK economy grew by 0.1% in the three months to September, according to the ONS, which is slower than expected.

Rachel Reeves and the government have been hopeful that stronger economic growth can help increase tax revenues and support government spending plans.

Slow growth or a stagnant economy over the third quarter would present a setback for the chancellor.

Sanjay Raja, chief UK economist at Deutsche Bank, has said the positive tempo in the economy earlier this year has “tempered” in the second half.

He added: “Anticipated weakness in growth is a result of weaker industrial production activity, and primarily weaker oil and manufacturing output.

“We expect the construction sector to remain flat on the month, with services activity just about inching higher to end Q3.”

GDP grew by 0.3 per cent in the three months to August 2025 compared with the three months to May 2025, a slight increase following growth of 0.2 per cent in the three months to July 2025.

But Sanjay Raja, chief UK economist at Deutsche Bank, predicts this will not last and UK economic growth will have slowed further over the third quarter of 2025.

He said: “Anticipated weakness in growth is a result of weaker industrial production activity, and primarily weaker oil and manufacturing output.

“We expect the construction sector to remain flat on the month, with services activity just about inching higher to end Q3.”