The UK economy grew by 0.1% in the third quarter

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The UK economy barely grew in the third quarter as the dominant services sector lost momentum, underscoring the challenge the Labor government faces in putting growth at the heart of its agenda. me.

The economy grew 0.1% in the quarter, the Office for National Statistics said on Friday, compared with a 0.5% increase in the second quarter. This figure is lower than economists’ expectations of 0.2%.

The services sector, which accounts for about 80% of the economy, grew 0.1%, eclipsing the 0.8% growth of the construction sector.

In a sign of weakening growth momentum over the three-month period, the economy shrank 0.1% in September, below economists’ expectations.

In the Budget late last month, chancellor Rachel Reeves increased taxes and borrowing in what Labor said was an attempt to repair public finances and improve public services. However, many businesses believe that increasing national insurance for employers will affect job creation and could cause companies to scale back investment plans.

After releasing the data on Friday, 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.” .

Earlier this month, the Bank of England cut interest rates to 4.75% but indicated that further reductions in borrowing costs were unlikely before the start of next year, as this weighed on the inflation outlook.

The BoE forecasts growth will continue to be lackluster in the final quarter of the year and forecasts growth of 0.3%.