UK Economy Records Sluggish Growth Amid Automotive Disruptions and Consumer Uncertainty

The UK economy expanded by just 0.1 per cent in the third quarter of 2025, according to the latest data released by the Office for National Statistics. This growth fell short of City economists’ forecasts of 0.2 per cent and is the weakest quarterly performance since late 2023. The downturn has been largely attributed to a severe decline in car production, following a major cyberattack at Jaguar Land Rover that forced the closure of its factories and triggered a 28.6 per cent drop in automotive output for September alone.

Month on month, GDP contracted by 0.1 per cent in September, in contrast to flat expectations among analysts. August’s figures were revised down to zero growth, while July’s rate was also adjusted lower. The first and second quarters of the year posted higher growth, at 0.7 per cent and 0.3 per cent respectively, but the sustained weakness into autumn poses significant challenges as the government readies for the upcoming budget announcements.

Chancellor Rachel Reeves addressed the figures by emphasising the government’s commitment to policies targeting the reduction of NHS waiting lists, the national debt, and the cost of living. Reeves is scheduled to deliver the budget on 26 November. Economic observers note that confidence across both consumers and businesses is currently lacking. Martin Beck, chief economist at WPI Strategy, highlighted the need for credible pro-growth policies, particularly addressing regulatory blockages and high energy costs, to counteract further under-performance.

Within the data, the services sector proved the most resilient, recording a 0.2 per cent growth over the quarter. Construction posted a marginal increase of 0.1 per cent, while output in production—which includes manufacturing—shrank by 0.5 per cent. Export figures also disappointed, with goods sales to the United States falling to their lowest level since early 2022.

The downturn in vehicle manufacturing was compounded by a subdued pharmaceutical sector, according to Liz McKeown at the ONS. Signs of pressure are also apparent in the labour market, where unemployment reached 5 per cent, its highest since January 2021, amid contracting employment growth.

Persistent economic weakness strengthens the likelihood of a rate cut from the Bank of England before the year’s end. Policymakers have thus far refrained from loosening monetary policy, prioritising further evidence of weak inflation and slower growth before lowering the bank rate from its current level of 4 per cent.