Rachel Reeves suffers one other blow as figures present UK’s economic system continues to flatline
The UK economy only grew by an unrevised 0.1% between July and September, according to the Office for National Statistics. It will cause another headache for the embattled Chancellor
Chancellor Rachel Reeves has suffered another blow as new figures show Britain’s economy continues to flatline.
The UK economy only grew by an unrevised 0.1% between July and September, according to the Office for National Statistics. It confirmed that growth slowed in the third quarter after the cyber attack at Jaguar Land Rover knocked activity in the manufacturing sector.
But output was also worse than first thought in the previous three months. Gross domestic product (GDP) expanded by 0.2% in the three months to June, revised down from the previous estimate of 0.3% growth. Liz McKeown, ONS director of economic statistics, said: “Today’s updated figures paint the same picture as our initial estimate, with growth continuing to slow in the third quarter.
“Growth in services was partially offset by falls in production, with a marked drop in car manufacturing.”
Matt Swannell, chief economic adviser to the EY Item Club, said: “The outlook for the private sector remains subdued.
“Real household income growth is now slowing sharply, and although the household saving ratio decreased in the third quarter, it remains high compared to historical standards. Another year of sluggish growth for the UK economy is expected in 2026.”
The official figures also showed higher-than-forecast government borrowing for November. Borrowing stood at £11.7 billion last month, £1.9 billion less than in November last year and the lowest November level for four years thanks to a sharp fall in debt interest payments.
But the figure was more than the £10 billion expected by most economists and the £8.6 billion forecast in March by the UK’s independent fiscal watchdog, the Office for Budget Responsibility (OBR). The OBR’s monthly forecasts from the Budget on November 26 are not available until mid-January, according to the ONS.
Borrowing for the eight months of the financial year so far was higher than expected, at £132.3 billion – £10 billion more than the same period a year ago and £16.8 billion above the OBR forecast in March. This was partly due to an extra £1.8 billion of spending on winter fuel payments after the Government’s U-turn on its decision to severely restrict payments, instead opting to give the payout to all pensioners except those earning above £35,000 a year.
This helped drive an upward revision to borrowing for the seven months to October by £3.9 billion.Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said there was “very little Christmas cheer for the Chancellor” in the latest figures.
He added that the Chancellor’s “fiscal plans rest on shaky foundations”, with the data showing that Britain’s public finances “remain weak” despite a lower out-turn for November.
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