UK Economic Growth Slows in Q3 Amid Production Challenges
The UK's economic growth slowed in the third quarter (July to September), with GDP increasing by only 0.1%, down from 0.2% in the second quarter. The Office for National Statistics (ONS) also revised the Q2 growth down from 0.3% to 0.2%. A significant factor in this slowdown was a cyberattack on Jaguar Land Rover that halted car production for several weeks, contributing to a marked drop in manufacturing output.
Despite the weakening in production, growth in services helped offset some of the decline. However, household finances showed strain, with the saving ratio falling to 9.5%, the lowest in a year, and disposable income per head declining by 0.8%. In response to the slowdown, the Bank of England cut interest rates to 3.75%. The BoE anticipates near-zero GDP growth in the final quarter of 2023, projecting underlying growth around 0.2% per quarter.
Year-on-year, GDP in Q3 was 1.3% higher than the same period last year, with the overall GDP growth for 2024 projected to be 1.1%. The ONS revised up estimated growth for the fourth quarter of 2024 by 0.1 percentage points to 0.3%. Earlier in 2023, Britain had one of the strongest growth rates among G7 countries in the first half of the year, but momentum has slowed since then.
