Britain’s economy lost further momentum over the summer, delivering a setback for Chancellor Rachel Reeves as Labour prepares its first autumn Budget amid mounting scepticism over the party’s handling of the public finances.
Official figures this morning from the Office for National Statistics (ONS) show GDP grew by a meagre 0.1pc in the three months to September, half the pace expected by analysts and a sharp slowdown from the 0.3pc recorded in the previous quarter.
September itself saw a 0.1pc contraction, underscoring the fragility of the recovery.
The weak figures will raise fresh doubts over Labour’s claims to be restoring economic stability. Reeves, who has repeatedly emphasised her commitment to fiscal discipline, is widely expected to raise taxes later this month in order to satisfy the borrowing rules she set for herself, rules that now look increasingly difficult to meet against a faltering economy.
While the services sector remained the only meaningful driver of growth, the rest of the economy showed troubling signs of strain. The production sector contracted across the quarter, with manufacturing particularly weak, according to the ONS. A “marked” fall in car output in September contributed significantly to the sector’s decline.
Liz McKeown, the ONS’s director of economic statistics, 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.”
Economists had forecast 0.2pc growth for the quarter, with zero growth in September. The below-par performance now places Labour in the uncomfortable position of unveiling its Budget against a backdrop of stagnation, weakening output and dwindling confidence, conditions likely to make the Chancellor’s promises of economic renewal harder to deliver.
With growth now all but flatlining, Reeves enters the Budget facing the very dilemma Labour spent years criticising: the tension between tax rises, public spending demands and an economy struggling to generate momentum.
Andre Walker on YouTube (nobody watches BBC now) says he believes millions of people are cancelling their TV licence because they feel let down. If this is true, the BBC is in deep crisis.