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Britain’s economy experienced an unexpected contraction in September, with growth nearly stagnating over the third quarter, dealing an early challenge to finance minister Rachel Reeves’ ambitions for a sustained economic boost.
According to data from the Office for National Statistics, Gross Domestic Product (GDP) declined by 0.1% in September, as the services sector remained stagnant while both manufacturing and construction recorded declines. Over the entirety of the third quarter, GDP grew by just 0.1%, a significant slowdown from the 0.5% growth seen in the second quarter.
This growth figure fell short of expectations. Economists surveyed by Reuters and the Bank of England had anticipated a 0.2% expansion for the July-September period, marking a notable deceleration from the strong growth earlier in 2024, when the economy was rebounding from a mild recession in the previous year.
Finance minister Rachel Reeves expressed her dissatisfaction with the latest economic data, emphasizing her commitment to revitalizing 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,” Reeves stated. She outlined plans to drive growth through investment, reform, job creation, NHS improvements, national infrastructure rebuilding, and border security enhancements.
The Bank of England recently revised its 2024 annual growth forecast downward from 1.25% to 1.0%, though it expects a more robust economic performance in 2025, partly due to the fiscal stimulus from Reeves’ expansive budget.
The UK’s post-pandemic recovery has been sluggish compared to its peers, with only Germany faring worse among major advanced economies, especially after energy price shocks from the conflict in Ukraine.
Prime Minister Keir Starmer, who campaigned on a platform aiming for annual GDP growth of 2.5%, continues to seek policies to achieve this goal—an ambitious target Britain has not consistently met since before the 2008 financial crisis. Reeves has set an even more ambitious vision for Britain to lead the Group of Seven economies in per capita GDP growth for two consecutive years.
