The UK economy experienced a modest growth of 0.1% between July and September, according to the latest official data from the Office for National Statistics (ONS). The growth rate fell below expectations, with the ONS reporting that economic activity remained subdued across most sectors during the quarter.
This sluggish performance comes as the new Labour government under Prime Minister Rachel Reeves prioritizes economic growth. However, Chancellor Reeves expressed dissatisfaction with the figures, calling them “not good enough” for the country’s recovery goals. The data represents the first three months of Labour’s tenure, highlighting challenges ahead for the government’s economic agenda.
Economists have pointed to uncertainty around October’s Budget as a key factor weighing on economic performance. In particular, September saw a slight contraction of 0.1%, as businesses held back on investment and decision-making amid anticipation of new fiscal measures.
Ben Jones, lead economist at the Confederation of British Industry (CBI), noted that many firms reported a “slowdown in decision-making” leading up to the Budget. He also suggested that the government’s fiscal policies, including planned tax increases, have raised concerns among businesses.
The Budget introduced higher National Insurance Contributions for firms, along with other measures, which are expected to prompt businesses to adopt a more cautious approach to hiring, pay, and investment, Jones said. These changes have already sparked backlash from some industry groups, who argue that the tax hikes could stifle economic growth and job creation.
As the government faces mounting criticism from the business community, all eyes are on how Labour will respond to these challenges and whether future policy shifts will help stimulate stronger economic growth.