The UK economy experienced a significant slowdown in the third quarter of the year, with growth of just 0.1% between July and September. This marginal expansion occurred despite a severe cyber-attack on automotive giant Jaguar Land Rover, which delivered a crippling blow to manufacturing output in the final month of the quarter.
September Slump Driven by Cyber Fallout
Official data from the Office for National Statistics (ONS) revealed that Gross Domestic Product (GDP) actually fell by 0.1% in September. This decline was largely attributed to the devastating hack on Jaguar Land Rover, which forced a dramatic reduction in car production. The fallout was so severe that it dragged down the sector's output to its lowest level in 73 years.
This performance fell short of market expectations, which had forecast a 0.2% expansion for the third quarter. The previous quarter had seen a more robust growth of 0.3%, highlighting a concerning deceleration in economic momentum.
Broader Economic Challenges Mount
The weak growth figures arrive alongside other troubling economic news. Recent data shows that unemployment has risen to 5%, marking the highest jobless rate the UK has seen in four years. This combination of stagnating growth and rising unemployment presents a complex challenge for policymakers.
The figures are published as Chancellor Rachel Reeves prepares to deliver a crucial budget on 26 November. She is widely anticipated to announce tax rises to counter a forecast downgrade from the independent Office for Budget Responsibility.
Government Response and Outlook
In a recent speech, Chancellor Reeves hinted at the difficult decisions ahead, stating, “Each of us must do our bit for the security of our country and the brightness of its future.” The government now faces the dual task of managing immediate fiscal pressures while addressing structural weaknesses in key sectors like manufacturing, which have been exposed by events such as the JLR cyber-attack.
The incident underscores the growing economic threat posed by cybercrime to critical national infrastructure and major employers, with repercussions that can ripple through the entire economy.
