UK Economic Growth Slows Dramatically Ahead of Crucial Budget
The UK economy experienced a significant slowdown during the third quarter of 2025, with official figures revealing growth had nearly stalled completely. This disappointing performance deals a substantial blow to the government just under two weeks before Chancellor Rachel Reeves delivers a crucial budget announcement.
Cyber Attack Halts Manufacturing Momentum
The Office for National Statistics confirmed that the economy expanded by just 0.1% between July and September, compared to the previous three-month period. This represents a sharp decline from the 0.3% growth recorded in the second quarter and fell below market expectations of 0.2%.
A major factor behind this underwhelming performance was the devastating cyber attack on Jaguar Land Rover, Britain's largest automobile manufacturer. The incident on August 31 forced the company to send workers home and halt production across its factories and supply chain. Operations only resumed in October, creating a significant disruption that rippled throughout the UK automotive sector.
The consequences were particularly evident in September's industrial data, with overall industrial output falling by 2% during the month. Most dramatically, car and trailer manufacturing plunged by 28.6%, representing the steepest decline since April 2020 during the height of coronavirus pandemic restrictions.
Worsening Economic Backdrop Puts Pressure on Treasury
This latest economic disappointment follows concerning unemployment statistics released earlier this week, which showed UK joblessness has risen to 5%, the highest level recorded in four years.
The weakening economic landscape presents a formidable challenge for Treasury chief Rachel Reeves, who would have been counting on stronger growth to bolster tax revenues and support government spending plans. Instead, she faces mounting pressure ahead of the November 26 budget announcement.
Reeves has strongly indicated that tax increases will be necessary to address the public finance shortfall. She is widely expected to raise the basic rate of income tax, a move no British government has implemented in half a century. Such action would also represent breaking a key manifesto commitment from the Labour government.
With the government struggling in opinion polls barely eighteen months after taking power, and Prime Minister Keir Starmer's approval ratings deeply negative, the upcoming budget represents a critical moment for the administration's political fortunes.
