UK economy latest: Growth slower than expected at 0.1% ahead of crucial Reeves Budget

Liberal Democrat Treasury spokeswoman Daisy Cooper MP said: “This is a damning indictment of Labour’s disastrous decisions.

“From employment tax to business rates bills, the economy is barely moving forward.

“The Chancellor must deliver on our plans for an emergency package that will save our high streets, put money back into families’ pockets and finally repair our broken relationship with Europe and save billions of dollars for our public services.”

Concerns about a slowdown in growth have led economists to predict that the Bank of England will cut interest rates to 3.75 per cent next month and cut rates more deeply than previously expected.

Policymakers will also look at the latest inflation data due next week as they consider the next vote on interest rates.

Growth of 0.1 percent is slower than experts had predicted, although they suggested it would slow in the third quarter.

Experts predicted the Office for National Statistics would report growth of 0.2 per cent in the three months to September in its latest update on Thursday morning.

This would represent a slowdown after a 0.3 percent increase in the previous quarter and continue a significant decline after a 0.7 percent increase in the first three months of the year.

The UK economy grew by a slower-than-expected 0.1% in the three months to September, according to the ONS.

Rachel Reeves and the government are hopeful that stronger economic growth could help boost tax revenues and support government spending plans.

Slow growth or a stagnant economy in the third quarter could pose a setback for the chancellor.

Sanjay Raja, Deutsche Bank’s UK chief economist, said that the positive pace in the economy at the beginning of this year “weakened” in the second half.

He added: “The expected weakness in growth is a result of weak industrial manufacturing activity and primarily weak oil and manufacturing output.

“We expect the construction sector to remain stable throughout the month, while service activity will increase slightly by the end of the third quarter.”

GDP grew by 0.3 per cent in the three months to August 2025 compared with the three months to May 2025; There was a slight increase after growth of 0.2 per cent in the three months to July 2025.

But Sanjay Raja, Deutsche Bank’s chief UK economist, predicts this will not last long and UK economic growth will slow further in the third quarter of 2025.

He said: “The expected weakness in growth is a result of weak industrial production activity and primarily weak oil and manufacturing production.

“We expect the construction sector to remain stable throughout the month, while service activity will increase slightly by the end of the third quarter.”

The Office for National Statistics (ONS) publishes new GDP figures every month.

As the budget approaches on November 26, these figures are an indication of how well the economy is doing.

Rising GDP indicates economic growth, which is generally welcome news for the country’s companies, households and politicians.

When GDP falls, it means the economy is shrinking. If it falls for two consecutive quarters, the country is considered to be in a recession, which could affect wages and employment.

Rachel Reeves and the government are hopeful that stronger economic growth could help boost tax revenues and support government spending plans.

Slow growth or a stagnant economy in the third quarter could pose a setback for the chancellor.