Nightmare for Rachel Reeves as UK growth hits embarrassing new low

The Office for National Statistics has reported a slower expected growth of 0.1% growth in the UK economy over the three months to September in its latest announcement this morning. Experts had previously predicted that the office would announce a 0.2% growth, which would have marked a slowdown of growth compared to the 0.3% jump recorded for the previous quarter, and a significant drop from the 0.7% rise in the first three months of the year.

The ONS GDP announcement is the most recent major economic announcement in the lead-up to the budget. Rachel Reeves is expected to make several changes in her autumn budget to fill a “black hole” in the UK economy, including an increase in income tax. Economists have said that a slow growth of 0.1% would represent another setback for the Chancellor.

Sanjay Raja, chief UK economist at Deutsche Bank, told PA news agency: “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.”

The economy may have been stunned in September after a series of cyberattacks took place. One of the most notable instances occurred with Jaguar Land Rover, which was forced to halt car production for a month.

ONS Director of Economic Statistics Liz McKeown has said: “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.”

GDP (Gross Domestic Product) is a key indicator of economic performance at a given time. It measures how much is produced in the UK, how much is spent and how much is earned in the country’s economy.

Breaking it down in more detail, the services sector grew by 0.2%, while construction expanded by 0.1%. Meanwhile, the production sector contracted by 0.5%.

Today’s announcement is a key indicator of Rachel Reeve’s performance as Chancellor ahead of the budget announcement on Wednesday, November 26, and she is sure to come under scrutiny today as many parties have already hit out at her reported budget plans.

A strong economy will see GDP growing steadily quarter on quarter. When GDP decreases for two quarters in a row, the economy is considered to be in a recession.

Some experts have expressed concerns that the Bank of England would cut interest rates next month to 3.75% following today’s GDP announcement. This will be decided after inflation rates are announced next week.