UK Growth Stalls to 0.1%, Economists Now Expect a December Rate Cut

The UK economy grew by only 0.1% in the three months to September, falling short of analyst expectations of 0.2%. The slowdown adds pressure ahead of the upcoming November Budget and highlights weakening demand across production, construction, and services. With the jobs market cooling and inflation easing, economists now expect another interest rate cut at the Bank of England’s December meeting, a shift that could directly influence mortgage affordability for buyers, movers, and contractors.

Production output fell 2% in September, largely due to a 28.6% collapse in car manufacturing following a cyberattack at Jaguar Land Rover, which forced major shutdowns. Analysts say that without this disruption, the economy would have shown a modest pick-up, but the incident exposes how vulnerable UK growth is to shocks within major employers. Across construction and services, demand has softened, with many households and businesses delaying spending decisions due to rising financial pressure and uncertainty around tax changes in the upcoming Budget.

Chancellor Rachel Reeves faces intense pressure ahead of her second Budget, as slow growth challenges the government’s pledge to rebuild public services without increasing taxes. With unemployment now at 5%, a four-year high, and pay growth cooling, many households are bracing for tighter budgets. Economists warn that slowing earnings, rising redundancies, and upcoming tax rises could stretch finances further, making borrowing decisions and debt management even more critical in the months ahead.