Reeves ‘not satisfied’ as economic growth slows in third quarter

Chancellor Rachel Reeves has said she is “not satisfied” after official figures showed that economic growth slowed in the months after Labour won the election, and even contracted in September.

The UK economy grew by 0.1% between July and September, versus 0.5% growth in the previous quarter, the Office for National Statistics (ONS) said.

The estimate was behind economists’ predictions of 0.2% and covers the months before the Budget in October, in which Labour unveiled a rise in spending and business taxes.

It comes as a blow to Labour, which has made growth a key part of its pitch to the general public, a strategy which helped the party win by a landslide in July.

Ms Reeves said: “Improving economic growth is at the heart of everything I am seeking to achieve, which is why I am not satisfied with these numbers.”

Speaking to reporters on Friday, Ms Reeves added that she wanted growth to “be stronger, to come sooner, and also to be felt by families right across the country”.

Sir Keir Starmer said growing the economy is the “single most important thing for this Government” and that slow growth under the Conservatives had held the country back.

“I want better than the figures today and I think there are early signs that we’re turning it around,” he told reporters in North Wales.

“We had a big investment summit just a few weeks ago and over £60 billion of inward investment came out of that. I want more of that investment, because that then translates into good, well-paid jobs and people feeling better-off.”

Liz McKeown, ONS director of economic statistics, said some sectors like retail and construction performed well, but added: “Generally, growth was subdued across most industries in the latest quarter.”

The economy is estimated to have contracted by 0.1% in September. Several experts said the slowdown could have been down to companies holding back on spending decisions until after the Budget.

In the run-up, Ms Reeves repeatedly warned that the Budget would contain “tough choices”. The statement itself, in which Labour announced a rise in employer taxes to help fund a boost in public spending, came after the period covered by these figures.

Ben Jones, lead economist at the Confederation of British Industry (CBI), said uncertainty ahead of the Budget “probably played a big part”, after firms reported a slowdown in making spending decisions.

The services sector, which makes up the bulk of the economy, was flat in September, and grew by just 0.1% during the three-month period.

Factory output fell 0.2% over the quarter, driven by a larger decline in the month of September, while the construction sector grew 0.8% over the quarter.