The UK economy grew by just 0.1% in the third quarter of 2023, down from 0.5% in the previous quarter, as reported by the Office for National Statistics.

This slowdown is attributed to uncertainty surrounding the Labour government’s first budget under Chancellor Rachel Reeves, and high interest rates.

The UK ranked sixth among G7 nations in growth for Q3, ahead of Italy but behind France, Germany, and the US, which achieved growth rates of 0.4%, 0.2%, and 0.7% respectively.

The Office for National Statistics (ONS) data indicated that a decline in both the services and manufacturing sectors contributed significantly to the economic slowdown.

In September, the GDP fell by 0.1% month-on-month, contrary to expectations of a 0.2% growth.

Factors such as a drop in manufacturing output and weak performance in the IT sector offset gains in car sales.

In the same period, business investment rose by 4.5% compared to the previous year, though the UK's trade position worsened with a continued fall in exports, partially offset by reduced imports.

Labour's budget measures, which include higher employer national insurance contributions, have faced criticism from business groups for increasing their costs and discouraging investment.

Shadow Chancellor Mel Stride criticized the Labour government, stating that they inherited a fast-growing G7 economy and have since slowed growth due to policy choices.

Despite the slowdown, consumer-facing services grew by 0.5%, and there are expectations for modest economic growth in the year ahead.

The Bank of England has kept interest rates high following modest reductions this year, with a current base rate of 4.75%, and financial markets predict a low probability of a rate cut in December.