The UK economy grew by 0.1% between July and September, according to the Office for National Statistics (ONS).
However, despite the slight positive GDP growth recorded in the third quarter, the economy contracted by 0.1% in September, dampening overall growth in the quarter.
Growth was also slower than experts had expected and down from growth of 0.5% between April and June, the ONS said.
Economists polled by Reuters and the Bank of England had forecast an expansion of 0.2%, a slowdown from the rapid growth seen in the first half of 2024, when the economy was rebounding from last year’s mild recession.
And the measure Labor says it focuses on most – GDP per capita, or economic output divided by the number of people in the country – also fell by 0.1%.
Reacting to the figures, Chancellor of the Exchequer Rachel Reeves said: “Improving economic growth is at the heart of everything I seek to achieve, which is why I am not happy with these figures.
“In my budget, I made difficult choices to repair the foundations and stabilize our public finances.
“Now we will generate growth through investment and reform to create more jobs and more money in people’s pockets, get the NHS back on its feet, rebuild Britain and secure our borders in a decade of national renewal,” added Ms. Reeves.
Weakness in the services sector – which makes up the bulk of the UK economy – has particularly weighed on growth over the past three months. It increased by 0.1%, canceling out the 0.8% growth in the construction sector.
UK GDP for the most recent quarter lags growth of 0.7% in the US and 0.4% in the Eurozone.
These figures pushed the UK towards the bottom of the G7 growth table for the third quarter of the year.
It was expected to reach the same 0.2% growth figures recorded in Germany and Japan, but fell below after a slow September.
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The British pound remained stable following this news, hovering around $1.267. The FTSE 100, meanwhile, opened the day down 0.4%.
The Bank of England predicted last week that Ms Reeves’ first budget as chancellor would increase inflation by up to half a percentage point over the next two years, contributing to a fall in interest rates. interest slower than previously thought.
Announcing a widely expected 0.25 percentage point reduction in the base rate to 4.75%, the Bank’s Monetary Policy Committee (MPC) forecasts that inflation will return “sustainably” to its objective of 2% in the first half of 2027, a year later than at its last meeting.
The Bank’s quarterly report reveals that Ms. Reeves £70 billion package The tax and borrowing measures will put upward pressure on prices and lead to a three-quarter point increase in GDP next year.