The UK economy unexpectedly contracted in September and growth slowed to a near standstill over the third quarter, dealing an early blow to finance minister Rachel Reeves’ efforts to drive sustained economic recovery.
Gross domestic product (GDP) fell by 0.1% in September, as the services sector stagnated and both manufacturing and construction declined, according to data from the Office for National Statistics. For the entire third quarter, the economy grew by a modest 0.1%, down from 0.5% growth in the second quarter.
Economists had predicted a 0.2% expansion for the July-September period, reflecting a slowdown from the strong recovery in the first half of 2024 as the economy rebounded from a mild recession last year.
In response to the figures, Reeves emphasized the importance of improving economic growth: “Improving economic growth is at the heart of everything I am seeking to achieve, which is why I am not satisfied with these numbers.”
The Bank of England had earlier revised its 2024 growth forecast down to 1% from 1.25%, though it anticipates a stronger economic performance in 2025, spurred by the government’s large-scale spending plans under Reeves.
