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

The 0.1 per cent growth is slower than experts predicted, after they already suggested it would slow down in the third quarter.

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

It will represent a slowdown after 0.3 per cent in the previous quarter, continuing a notable drop-off after a 0.7 per cent rise in the first three months of the year.

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

Rachel Reeves and the government have been hopeful that stronger economic growth can help increase tax revenues and support government spending plans.

Slow growth or a stagnant economy over the third quarter would present a setback for the chancellor.

Sanjay Raja, chief UK economist at Deutsche Bank, has said the positive tempo in the economy earlier this year has “tempered” in the second half.

He added: “Anticipated weakness in growth is a result of weaker industrial production activity, and primarily weaker oil and manufacturing output.

“We expect the construction sector to remain flat on the month, with services activity just about inching higher to end Q3.”

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

But Sanjay Raja, chief UK economist at Deutsche Bank, predicts this will not last and UK economic growth will have slowed further over the third quarter of 2025.

He said: “Anticipated weakness in growth is a result of weaker industrial production activity, and primarily weaker oil and manufacturing output.

“We expect the construction sector to remain flat on the month, with services activity just about inching higher to end Q3.”

Every month the Office of National Statistics (ONS) publishes new GDP figures.

In the run-up to the budget on 26 November these figures are a marker for how well the economy is doing.

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

When GDP is falling, it means the economy is shrinking. If it falls for two quarters in a row, the country is considered to be in a recession which can hit wages and jobs.

Rachel Reeves and the government have been hopeful that stronger economic growth can help increase tax revenues and support government spending plans.

Slow growth or a stagnant economy over the third quarter would present a setback for the chancellor.