The UK’s economic momentum slowed sharply in the third quarter, with GDP edging up just 0.1% — a marked loss of pace after stronger growth earlier in the year. While the economy expanded by 0.7% in the first quarter and 0.3% in the second, the latest figures paint a more subdued picture.
Industry experts share their views on what this means for advisers and their clients below:
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK GDP figures:
“This latest set of growth figures adds to the immense weight on Rachel Reeves’ shoulders ahead of her second Budget.
“Confidence is crucial, and even sectors that delivered a tiny bit of growth over the summer such as construction and services have seen demand dwindling as many businesses and households decided to press pause on their spending decisions.
“Growth was held up by this government as a panacea – the way to build back public services and pay out more in benefits and wages without the need to increase taxes. But the sums never seemed to add up and the chancellor is now faced with the prospect of breaking manifesto commitments and then trying to foster the confidence needed to deliver growth whilst taking billions out of people’s pockets through tax hikes.
“The contraction in September can partly be explained by that debilitating cyber-attack on Jaguar Land Rover, but when you strip out population growth the economy simply stalled over the summer. It’s a long way from the economy bounce the country enjoyed at the start of the year when many companies were front loading production in order to beat Donald Trump’s tariffs.
“Households and businesses are nervous and the late date for this year’s Budget has allowed time for the Treasury to roll its pitch, but it’s created uncertainty at the exact moment retailers and hospitality venues need people to indulge in festive cheer.
“Starmer and Reeves need to dust themselves off and be ready to sell what are expected to be uncomfortable decisions to the country if they want to prevent more months of negative growth.”
Richard Flax, Chief Investment Officer at Moneyfarm, comments:
“UK GDP growth came in at 0.1% QoQ in Q3, a moderation from 0. 3% in Q2 while annual growth eased from 1.3% from 1.4% last year. The figures confirm what many economists have been expecting, a sluggish but still positive performance as higher borrowing cost and weak household spending continued to weigh on activity.
Growth was on uneven across sectors, with consumer facing industries showing modest resilience, while business investments and exports remain subdued amid persistent uncertainty over rates and global demand. The economy continues to thread a fine line between stagnation and recovery, suggesting that underlying momentum remains fragile.”
Lindsay James, investment strategist at Quilter:
“Today’s GDP release confirms what recent data has hinted at – the UK economy is struggling to maintain momentum as we head towards year-end. Monthly growth has fallen by 0.1%, with August’s figure also downgraded to no growth. The three-month rate shows growth of just 0.1%, a step down from the 0.7% seen in Q1 and the 0.3% delivered in Q2, with industrial output back in contraction in September, partly due to the Jaguar Land Rover cyber-attack issues. This paints a picture of an economy that started 2025 strongly but is now badly losing steam just as the Chancellor prepares for a pivotal Autumn Budget. Her next move will be critical if she is to recover Labour’s economic growth mission and prevent any whispers of a recession looming.
“The nature of this Budget remains crucial for what comes next. Encouragingly, inflation appears to have peaked, with rate cuts on the horizon. However, uncertainty over potential tax rises and persistent rumours of employers being targeted yet again, such as through an ill thought-out attack on DC pension contributions via salary sacrifice, risks snuffling out fragile business confidence and pushing unemployment, already now at 5%, markedly higher. It appears lessons from last year’s budget which pushed up employer national insurance contributions, with an ensuing inflationary impact on service sector price inflation and the labour market, have not yet been learned. Manufacturing surveys point to contraction, and even the services sector – traditionally the UK’s growth engine – has seen downgrades in its growth.
“Against this, gilt yields have eased from January highs, ultimately a positive given current government borrowing levels. However, fiscal policy decisions at the Budget in less than two weeks will be critical in shaping sentiment. If the government is serious about stimulating growth, the Budget must restore confidence and avoid measures that risk adding further inflationary pressure or denting the labour market. Investors should expect volatility but also remember that UK equities have shown resilience this year, underlining the importance of diversification in uncertain times.”
Commenting, John Wyn-Evans, Head of Market Analysis at Rathbones, said:
“September’s GDP data, the last to be released before the Budget, made poor reading for the Chancellor, with activity falling by 0.1% from August’s level. Third quarter growth came in at just 0.1% vs the second quarter with annual growth running at 1.3%.
“In mitigation, the shortfall vs expectations was largely due to the cyber-attack at Jaguar Land-Rover, where the consequent production shutdown led to an overall drop of 28.6% in UK car manufacturing output. That should at least rebound in coming months, but, following the attack earlier this year on Marks & Spencer, provides a reminder of the new sorts of threats that businesses face today and how big an impact they can have on activity.
“With consumption growth of just 0.2% quarter-on-quarter and business investment falling, the underlying economy remains sluggish. The constant speculation about the forthcoming Budget and the threat of as much as £40bn of fiscal tightening will continue to weigh on sentiment even as the effects of the last round of tightening are still working their way through the employment market.
“For many, it will just be a relief to know where they stand after 26 November and be able to make longer-term plans.
“If there is a silver lining, it is that weak activity and (hopefully) non-inflationary fiscal tightening in the Budget will open the door for the Bank of England to cut interest rates sooner. Market-derived pricing indicates an 85% probability of a quarter-point reduction at the 18 December meeting, up from just 20% a month ago. This increasing probability has already been reflected in the recent weakness in sterling, a move exacerbated to some degree by the infighting in the Labour Party and the threat of a leadership challenge leading to a more left-wing replacement.
“Even so, on a trade-weighted basis, the pound continues to trade roughly in the middle of its post-Brexit range, suggesting no real signs of alarm amongst global investors.”
David Morrison, Senior Market Analyst at FCA-regulated fintech and financial services provider, Trade Nation, comments:
“Unfortunately, today’s data will be of little comfort to anyone, least of all the Chancellor of the Exchequer ahead of her budget in less than a fortnight’s time. GDP growth was tepid and trending in the wrong direction. In addition, there was little joy to be found in Industrial Production or Manufacturing Production either, while a hoped-for bounce-back in Business Investment failed to materialise. The only bright spot was an uptick in Construction. But given yesterday’s grim jobs numbers, which continue to show the pain caused by Ms Reeves’ hike in employer national insurance, then the best hope is that inflation has finally topped below 4%. This would give the Bank of England enough cover to cut interest rates next month. Unless, of course, the Chancellor decides to hike VAT, in which case, all bets are off.”
Nicholas Hyett, Investment Manager at Wealth Club said:
“A shrinking economy is not what any Chancellor wants days before a Budget. However, in this case it’s the cyberattack on Jaguar Land River that has slammed the brakes on UK economic growth, and without it economic activity would be showing a modest pick up.
The massive knock on effects of events at a single company shows how vulnerable the UK economy is at the moment. Not only are large companies at risk from increasing cyberattacks, but the economy as a whole is reliant on a few central employers whose fortunes ripple out across the entire country.
Large national champions are great – but they need to form part of a diverse economic ecosystem and today’s numbers are an excellent example of why the government should be looking hard at supporting small businesses in particular in the Budget. Small companies are any country’s economic engine, and they have the added advantage of not tripping the entire economy when things go wrong.”
George Lagarias, Chief Economist at Forvis Mazars comments:
“Weak British GDP in September is not idiosyncratic, but rather the result of global headwinds and weak demand for manufacturing products. Next month’s numbers should be a bit higher, as October’s manufacturing somewhat stabilised, but we don’t see the case for an economic rebound at this point. Today’s numbers, combined with higher unemployment and weaker wage growth, bring a December rate cut from the Bank of England even closer.”
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE 100 is down at the open, looking weaker than early futures prices had anticipated. Investors are choosing to take a negative view of the double-edged sword that is GDP. The initial readout was worse than expected with output shrinking 0.1% in September compared to forecasts of a flat outcome. Production was the most notable brake on growth, impacted by the cyber-attack on Jaguar Land Rover, one of the costliest in UK history, and driving a 28.6% fall in production from the motor industry. There were however some more encouraging signs in construction and services which each grew by 0.2%.
Overall, however growth in the quarter was just 0.1%, with no growth at all on a per head basis. Today’s figures provide further support for a further rate cut next month with markets now pricing in over an 80% chance of a quarter point drop. However, the weak growth backdrop will do little to alleviate more structural concerns about UK productivity and provides little wiggle room for giveaways in this month’s Budget.
The uncertainty around the Budget is weighing heavy on the housing market, with the RICS UK Residential Survey showing a 24% drop in new buyer enquiries in October, with pricing pressure also building. London, the South East and East Anglia are looking particularly exposed. Against this backdrop housebuilder Persimmon’sthird quarter statement can be taken as a win, with forward sales up 15% and 2025 guidance unmoved.”
Ian Corfield, the CEO of Secure Trust Bank:
“UK GDP grew by a modest 0.1% in Q3 2025, slowing from 0.3% in Q2 and falling short of expectations. Growth was driven primarily by the services sector, which offset a contraction in production. However, the overall picture remains weak.
Adding to the concern, unemployment rose to 5% in September, the highest in five years. This combination of anaemic growth and a softening labour market strengthens the case for monetary policy doves. Given the last MPC vote was a narrow 5-4 hold, these developments could tip the balance toward a rate cut.
For the Chancellor, the twin challenges of sluggish growth and rising unemployment complicate the Autumn Budget. Equally, this will further intensify pressure on the Bank of England to cut rates. How these challenges play out in the run up to Xmas will be a must see for the economy.”
Derrick Dunne, CEO of YOU Asset Management, has commented:
“GDP growth for Q3 has come in painstakingly low. With unemployment rising and inflation too high for comfort, the economic outlook for the UK now couldn’t be more disconcerting. There are two big questions now to consider: what does the Chancellor do in light of these numbers? And how does the Bank of England respond to this?
“While we can’t be sure what Reeves’s announcements will contain, there is rising certainty now that rate setters will cut in December. This is still something of a gamble with inflation at the level it is, but most indications suggest that this should begin to recede quite quickly into the new year.
“The next question then is what rate cuts will do to the economy. Like when rates were rising, the effects of changes to the central policy rate take time to feed through to the wider economy, hence why the Bank is likely to act in December and not in six months when inflation is closer to target.
“What happens next in the economy ultimately comes back to impending fiscal decisions made in Whitehall, how inflationary they are and whether households are squeezed broadly by tax hikes, or we see changes that have unexpected distortionary effects on the wider economy.
“Anyone who is unsure about how this could impact their personal finances should speak to a financial planner.”
Scottish Friendly savings expert Kevin Brown has commented on this morning’s Q3 GDP figures:
“Despite all the doom and gloom surrounding the UK economy, it continues to show remarkable resilience in the face of serious challenges. Growth may be modest, but the economy has expanded for the fourth consecutive quarter – no matter how modestly – something that deserves recognition given the headwinds it’s up against.
“However, the data makes clear that Britain has become a two-speed economy, with services powering ahead and construction ticking up while the manufacturing sector struggles. A large part of that slowdown reflects nervousness over what might come in the Autumn Budget, where the Chancellor is expected to raise taxes to plug an estimated £30-40bn hole in the public finances.
“While today’s figures are a pleasant surprise, they’re unlikely to shift the Bank of England’s thinking on interest rates. We still expect a rate cut next month. Savers should use this window to shop around for a better deal because once rates fall, savings providers will move quickly to cut theirs. For those prepared to take a longer-term view, investing in the stock market remains the most reliable way to outpace inflation.”
Phoebus Software’s chief sales and marketing officer, Richard Pike, says:
“The latest UK Finance data shows the number of homeowner mortgages in arrears is continuing to decline. While the cost‐of‐living pressure persists, the fact that arrears have fallen for a second quarter suggests the bulk of borrowers are managing. However, the 4% increase in repossessions is worrying news, particularly on the back of the unemployment data this week, which shows the jobless figure has reached 5%.
“While the fall in arrears is welcome, lenders can’t afford to be complacent. Many borrowers took longer deals when rates were much lower and so there remains a risk of payment shock when their deals end over the coming months. Lenders should remain vigilant, particularly as criteria relax and risk appetite rises, and ensure their systems are flagging any potential issues so the correct interventions can be made.
“With the outlook for household finances remaining fragile, and the spectre of higher taxes looming, now is the moment for lenders to lean into intelligent, scalable arrears solutions. A more automated seamless servicing infrastructure will be essential to uphold performance and support vulnerable customers.”
