The slowdown has intensified pressure on Chancellor Rachel Reeves ahead of the autumn Budget.
LONDON, Nov. 14 (Xinhua) — Britain’s economy is facing a series of challenges, with growth losing momentum, inflation remaining elevated, and unemployment rising to a post-pandemic high. Ahead of the autumn Budget later this month, expectations are mounting for measures to reduce costs, boost investment, and shore up confidence.
LACK OF GROWTH MOMENTUM
The British economy slowed again in the third quarter (Q3), with real gross domestic product (GDP) edging up by just 0.1 percent, down from 0.3 percent in the previous quarter and a sharp drop from the 0.7-percent expansion recorded at the start of the year, according to data released Thursday by the Office for National Statistics (ONS).
Julian Jessop, economics fellow at the Institute of Economic Affairs, said the figures show that the stronger growth seen earlier in the year “has already fizzled out.” He noted that GDP declined in each month of Q3 before rounding.
In output terms, services grew by 0.2 percent and construction by 0.1 percent between July and September, while the production sector contracted by 0.5 percent, ONS data showed. “Growth slowed further in Q3 with both services and construction weaker than in the previous period,” said Liz McKeown, ONS director of economic statistics.
The National Institute of Economic and Social Research (NIESR) said the average month-on-month growth rate in Q3 was -0.1 percent, reflecting subdued market conditions. Anna Leach, chief economist at the Institute of Directors, said underlying momentum remains weak, with last year’s cost pressures, a softening labor market, and weak real wage growth weighing on consumer and business spending.
Real GDP per head showed no growth in Q3, highlighting the lack of improvement in living standards, according to Leach. The unemployment rate rose to its highest level since the pandemic, while consumer price inflation has held at 3.8 percent for months, almost twice the Bank of England’s 2 percent target.
BUDGET EXPECTATIONS RISE
The slowdown has intensified pressure on Chancellor Rachel Reeves ahead of the autumn Budget. Stuart Morrison, research manager at the British Chambers of Commerce (BCC), said the absence of consistent growth makes this month’s fiscal statement a make-or-break moment for business.
A recent BCC survey of more than 4,600 firms found that a quarter have scaled back investment plans, while a fifth expect turnover to worsen over the next year. Morrison urged the government to avoid further tax rises and to prioritise measures that address skills shortages, support exporting, and accelerate infrastructure projects.
Ben Jones, lead economist at the Confederation of British Industry, said businesses are looking for a clear signal that the government is committed to unlocking investment and improving competitiveness. “Not another round of tax rises or short-term fixes that would deepen the drag on growth,” he said.
Earlier this month, the Chancellor delivered a pre-Budget speech suggesting further tax increases, though she has since dropped plans for rises in income tax, according to the Financial Times.
NIESR associate economist Fergus Jimenez-England said that while GDP growth is expected to be stronger this year than last, it is largely supported by government spending rather than private-sector activity. With fiscal tightening anticipated, he warned that restoring confidence will require “a larger buffer to reduce policy churn and uncertainty.”
Ashwin Kumar, director of research and policy at the Institute for Public Policy Research, said the government needs to continue efforts to boost public and private investment, reform the planning system, and improve Britain’s trading relationship with the European Union. He added that providing greater certainty for businesses and reforming taxes to promote growth would be key. ■