UK Economic Slowdown Confirmed by Official Figures in Q3 2023
The UK economy experienced a slowdown in the third quarter of 2023 (July to September), with GDP growth at 0.1%, down from 0.2% in the second quarter, which itself was revised down from an initial 0.3%.
A significant factor contributing to this deceleration was a cyberattack on Jaguar Land Rover, which halted car production for several weeks, causing production output to fall sharply, particularly in car manufacturing. While the services sector grew during this period, the overall production decline pulled GDP growth lower.
Household financial measures also showed a decline: the household saving ratio dropped by 0.7 percentage points to 9.5%, the lowest in a year, and household disposable income per head fell by 0.8%.
In response to the weaker economic growth, the Bank of England reduced interest rates to 3.75% last week and anticipates zero GDP growth for the October to December quarter, although it expects the underlying pace to be around 0.2% per quarter.
Despite the slowdown, GDP in Q3 2023 was 1.3% higher than the same period the previous year, and overall growth for 2024 is projected to be 1.1%. The Office for National Statistics also revised up the growth forecast for the fourth quarter of 2024 by 0.1 percentage points to 0.3%.
