UK economic growth slowed sharply in the third quarter, rising just 0.1% between July and September, as a steep fall in car production and subdued consumer spending weighed on activity ahead of the Chancellor’s Budget later this month.
The figure, published by the Office for National Statistics, fell below analysts’ expectations of 0.2% and represents a slowdown from the 0.3% growth recorded between April and June and the 0.7% expansion at the start of the year.
The ONS said the downturn was driven by a “marked” fall in car production after a cyber-attack on Jaguar Land Rover forced the UK’s largest carmaker to halt manufacturing for five weeks. The attack, which began on 31 August, caused car output to collapse by 28.6% in September, pushing overall production down 2%.
Even when the automotive disruption is excluded, the wider economy showed signs of fragility. Growth in services and construction slowed compared with the previous quarter, while consumer spending remained weak as households contend with high living costs and uncertainty ahead of the 26 November Budget.
Economists said the softer-than-expected figures underline the challenges facing Chancellor Rachel Reeves, who has repeatedly put economic growth at the centre of her agenda but is widely expected to announce tax increases to address a fiscal shortfall. Some analysts also suggested the weak GDP data increases the likelihood of an interest rate cut from the Bank of England as soon as December. Rob Wood, chief UK economist at Pantheon Macroeconomics, said the data “all but seals a December rate cut,” especially when combined with disappointing labour market figures released earlier this week.
For businesses, the slowdown reflects lingering pressures from last year’s Budget, which raised employer National Insurance contributions and increased the national living wage. Allan Jones, managing director of TC Morris, a pie manufacturer in Dudley employing around 50 people, said operating costs had risen by £200,000 this year.
“I think there’s a level at which people are prepared to pay for a pork pie,” he said. “We’ve managed to pass on some increases, but we’ve had to absorb quite a bit. We need to see some easing in the Budget – lower taxes, lower energy costs, and more support for investment.”
Reeves said the UK still had the fastest-growing economy in the G7 in the first half of the year but acknowledged “there’s more to do to build an economy that works for working people.” She said her Budget would take “fair decisions” to cut waiting lists, reduce the national debt and lower living costs.
Shadow Chancellor Mel Stride criticised the government, claiming that Sir Keir Starmer had “stripped the chancellor of responsibility for the Budget.”
Liz McKeown, ONS director of economic statistics, highlighted the impact of the cyber-attack and a decline in the volatile pharmaceutical sector. “Services were the main contributor to growth,” she said, “with business rental and leasing, live events, and retail performing well, partly offset by falls in R&D and hair and beauty salons.”
Ruth Gregory, deputy chief UK economist at Capital Economics, said that even without the Jaguar Land Rover disruption, the economy “is struggling to gain decent momentum.” She added that planned tax rises could trim GDP by around 0.2% in 2026, leaving little prospect for faster growth.
