The UK grew at a slower pace than expected in the third quarter, according to the latest figures, after the economy contracted in September.
New figures from the Office for National Statistics (ONS) showed that the economy grew 0.1 per cent in the third quarter, after contracting 0.1 per cent in September.
Economists had expected both the quarterly and monthly figures to show a 0.2 per cent expansion.
The figures confirm that the economy has slowed significantly compared to the first half, when the UK was among the first growing G7 economies in the world.
“The economy grew a little in the latest quarter overall as the recent slowdown in growth continued,” Liz McKeown, director of economic statistics at the ONS said. “Generally, growth was subdued across most industries”.
The figures are the first since the new government’s first Budget. Kickstarting economic growth is at the heart of Labour’s policy agenda, but many business groups said last month’s Budget would stifle rather than support growth.
Chancellor Rachel Reeves announced that taxes would go up by around £40bn, with businesses shouldering the majority of the increase. This would help fund a big increase in spending on public services.
Businesses, particularly in the retail and hospitality sector, have warned that they will have to cut jobs or pass on higher costs to consumers as a result of the changes.
The Office for Budget Responsibility (OBR) reckons that the Budget will “temporarily boost” output in the near term, although GDP will be “largely unchanged” in five years.
They expect the UK to grow 1.1 per cent this year and 2.0 per cent next year, before easing to 1.5 per cent in 2027.
The Bank of England’s latest forecasts have a similar profile for economic growth. The Bank expects the UK to expand 1.75 per cent next year before falling back to 1.1 per cent in 2026.
More to follow