UK economic growth slows down sharply in the third quarter

The Office for National Statistics said growth during the July to September period was just 0.1%. That was lower than the 0.5% recorded in the previous three-month period and below market expectations for 0.2%.

The statistics agency said output in September shrank, a development that is likely to fuel accusations from critics of the new Labour government talked the economy down in its first few weeks in power.

Labour, which took office in July for the first time in 14 years, has made raising economic growth its number one priority over the next five years.

Since the global financial crisis in 2008-9, the British economy has underperformed relative to previous years.

Richard Hunter, head of markets at Interactive Investor, commented in an email sent to Euronews Business: “UK growth was the immediate centre of attention, and did not make for cheery reading. The economy grew by just 0.1% in the third quarter, with a decline of 0.1% in September. Both numbers were expected to show expansion of 0.2%, with some pointing to the weak figures as evidence of uncertainty leading up to the Budget from businesses and consumers alike.

“The new government’s higher spending plans add to uncertainty around US tariffs, and whether the UK will be able to dodge some of those bullets or will be drawn in as the US continues with its own domestic focus. With the risks currently to the upside, the mood in markets was mostly sombre at the open,” he said.

UK market reaction

Meanwhile, he noted that the more domestically focused FTSE250 fell slightly in early trade, reducing its gain in the year to date to 3.9% as the trajectory for UK economic prospects remains the subject of some debate.

“In the premier index, Land Securities rose after swinging to a half-year profit and raising its outlook, but this was a rare bright spot. A broad markdown weighed on the FTSE100, continuing the recent malaise whereby any gains have proved to be unsustainable in the shorter term and investor sentiment unconvinced, The index is now ahead by 3.9% so far this year, with sterling weakness and exposure to what could be a burgeoning US economy potentially positive drivers further down the line,” Hunter said.