Reeves ‘not satisfied’ as economic growth slows in third quarter

Chancellor Rachel Reeves has said she is “not satisfied” aft authoritative figures showed that economical maturation slowed successful the months aft Labour won the election, and adjacent contracted successful September.

The estimation was down economists’ predictions of 0.2% and covers the months earlier the Budget successful October, successful which Labour unveiled a emergence successful spending and concern taxes.

It comes arsenic a stroke to Labour, which has made maturation a cardinal portion of its transportation to the wide public, a strategy which helped the enactment triumph by a landslide successful July.

Ms Reeves said: “Improving economical maturation is astatine the bosom of everything I americium seeking to achieve, which is wherefore I americium not satisfied with these numbers.”

Speaking to reporters connected Friday, Ms Reeves added that she wanted maturation to “be stronger, to travel sooner, and besides to beryllium felt by families close crossed the country”.

Liz McKeown, ONS manager of economical statistics, said immoderate sectors similar retail and operation performed well, but added: “Generally, maturation was subdued crossed astir industries successful the latest quarter.”

The system is estimated to person contracted by 0.1% successful September. Several experts said the slowdown could person been down to companies holding backmost connected spending decisions until aft the Budget.

In the run-up, Ms Reeves repeatedly warned that the Budget would incorporate “tough choices”. The connection itself, successful which Labour announced a emergence successful leader taxes to assistance money a boost successful nationalist spending, came aft the play covered by these figures.

Ben Jones, pb economist astatine the Confederation of British Industry (CBI), said uncertainty up of the Budget “probably played a large part”, aft firms reported a slowdown successful making spending decisions.

The services sector, which makes up the bulk of the economy, was level successful September, and grew by conscionable 0.1% during the three-month period.

Factory output fell 0.2% implicit the quarter, driven by a larger diminution successful the period of September, portion the operation assemblage grew 0.8% implicit the quarter.

Shadow chancellor Mel Stride blamed the Government for talking down the system aft winning the election, and said it was “reaping, to a degree, what they’ve done”. Mr Stride besides pointed retired that the Government had followed up with a Budget that ramped up taxes which “are going to carnivore down connected growth”.

Labour’s nationalist spending increases, which magnitude to astir £70 cardinal per year, according to the Office for Budget Responsibility, are projected to boost economical maturation implicit the adjacent 2 years, comparative to erstwhile forecasts.

Sanjay Raja, main UK economist astatine Deutsche Bank, said: “The roadworthy up remains bumpy.”

He warned that the taxation rises could deed concern spending further earlier Labour’s spending plans commencement having a affirmative interaction aboriginal adjacent year.

“We spot maturation picking up a interaction towards year-end. And we inactive spot affirmative momentum into 2025,” helium said.

“But downside risks are brewing. Geopolitical risks are connected the emergence with the spectre of a commercialized warfare looming.” 

The GDP figures besides travel Bank of England policymakers’ determination to chopped involvement rates by a 4th constituent to 4.75% successful aboriginal November, with different rates determination coming successful December.

Suren Thiru, economics manager astatine the Institute of Chartered Accountants successful England and Wales, said that contempt the “downbeat” figures, different complaint chopped adjacent period looks “improbable”.

He said rate-setters volition “likely beryllium acrophobic capable implicit ostentation risks from the Budget and increasing planetary headwinds to defy signing disconnected back-to-back involvement complaint cuts”.

The Bank has besides forecast that the other nationalist spending volition boost economical maturation by 0.75 percent points astatine its highest successful a year’s time, comparative to erstwhile forecasts published successful August.