UK Economic Growth Slows in Q3 Amid Jaguar Land Rover Cyberattack and Production Declines
The UK economy experienced a slowdown in the third quarter of 2023, with GDP growth recorded at 0.1% between July and September, down from a revised 0.2% in Q2, which was originally estimated at 0.3%. This deceleration reflects various challenges, including a significant disruption in car manufacturing caused by a cyberattack on Jaguar Land Rover, which halted production for several weeks.
The overall growth in services during the quarter was offset by declines in production sectors, particularly the noted drop in vehicle manufacturing. Household financial conditions also tightened; the saving ratio fell by 0.7 percentage points to 9.5%, marking its lowest level in a year. Additionally, disposable income per head decreased by 0.8%.
In response to these economic pressures, the Bank of England lowered interest rates to 3.75% last week to support growth. The central bank anticipates no growth in GDP during the final quarter of 2023, although underlying growth is expected to be around 0.2% per quarter going forward.
On an annual basis, Q3 GDP was still 1.3% higher than a year earlier, with cumulative growth for 2024 up by 1.1%. The Office for National Statistics also revised the Q4 2024 GDP forecast slightly upward by 0.1 percentage points to 0.3%. Overall, the data confirms a period of economic slowdown influenced by production challenges and reduced household savings.
