Rachel Reeves has been handed a major setback after it was revealed that the UK’s economy suffered a slump in Labour’s first quarter.
Economic growth slowed between July and September relative to the previous quarter, according to official data from the Office of National Statistics (ONS).
The economy grew by 0.1% over the period, versus 0.5% growth between April and June.
The estimate was behind economist predictions of 0.2% and comes after Labour unveiled a rise in Government spending and business taxes in the Autumn Budget last month.
The economy is estimated to have contracted by 0.1% in September 2024, after growth in the months before that, largely because of declines in factory output and IT services.
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.
“At my Budget, I took the difficult choices to fix the foundations and stabilise our public finances.
“Now we are going to deliver growth through investment and reform to create more jobs and more money in people’s pockets, get the NHS back on its feet, rebuild Britain and secure our borders in a decade of national renewal.”
The services sector, which makes up the bulk of the economy, showed no growth in September, and grew by just 0.1% during the period.
Factory output fell 0.2% over the three-month stint driven by a larger decline in the month of September, while the construction sector grew 0.8% over the quarter.
Liz McKeown, ONS director of economic statistics, said: “The economy grew a little in the latest quarter overall as the recent slowdown in growth continued.
“Retail and new construction work both performed well, partially offset by falls in telecommunications and wholesale. Generally, growth was subdued across most industries in the latest quarter.
“In September the economy shrank a little. Services showed no growth with a notable increase in car sales offset by a slow month for IT companies.
“Production fell overall, driven by manufacturing, though there was an increase in oil and gas extraction.”
