The UK economy slows down to 0.1% In Q3
- Khanh An N
- 30 thg 11, 2025
- 10 phút đọc
Đã cập nhật: 28 thg 12, 2025
by Nguyễn Đức Khánh An and Phạm Gia Phú
Summary
The United Kingdom’s economic growth rate dropped to 0.1% in September, lower than the expected growth.
The Jaguar Land Rover cyber-attack is partly responsible for the fall in growth, according to the Office of National Statistics.
Trump’s tariffs created uncertainty that had limited domestic investments and exports.
The November 2025 Budget saw rising taxes and provision of welfare in order to kick growth.
“We had the fastest-growing economy in the G7 in the first half of the year, but there’s more to do to build an economy that works for working people”
The slowdown
According to the data of Gross Domestic Production: Quarter on Quarter growth issued by the Office of National Statistics (ONS) on November 13th, economic growth fell to 0.1% by the third quarter. This is much lower than the expected 0.2%, which was exactly the 2024 third quarter’s growth [1].
Notable economic data shows that inflation rates maintain at around 3.8%, higher than the targeted 2% but still lower than expected [2]. The unemployment rate increased to 5% at the end of September, the highest level since the three months to May 2021 and is slightly above the 4.9% [3]. The total trade deficit widened to £1.28 billion as total imports rose while total exports fell [4].
Slow economic growth was expected onward, despite the skyrocketing 0.7% growth in Q1 of 2025 – the fastest among G7 countries. This is attributed to Labour’s Stamp Duty Land tax in March, and Donald Trump’s 10% tariffs on the UK in April. In turn the United Kingdom saw a moderate consumer expenditure and a decline in domestic investments, with total exports falling over concerns of trade wars.
Much of the setbacks, however, is not to blame for the slower-than-expected growth. Bank of England suggests that the automotive cyber-attack is partly responsible for messing up the car production supply chain [5].
Jaguar Land Rovers Cyber-attack
On August 31st, the cyber-attack began on three automotive manufacturing plants: the Solihull, Halewood, and Wolverhampton. In response, Jaguar Land Rovers (JLR) halted production for three weeks and sent home workers, insisting them to stay at home [6].
Originally, JLR announced that car production would be reverted on September 24th, however they would continue the pause until October 1st for further forensic investigation [7]. This sparked fear among supply chain workers and automotive businesses for potential layoffs. Labour MP Liam Bryne warned the JLR attack could lay off hundreds of workers, urging the government to intervene or otherwise thousands of people will be laid off [8].
The halt in production significantly reduced UK car production in the high-demand month of September. The Society of Motor Manufacturers and Traders Limited (SMMT) estimated a tumble of 27% with 51k cars produced, reaching the lowest of the month since 2021 when COVID-19 was ongoing [9]. Report says that the cyber-attack cost £50 million per week for JLR to repair IT and supply chain systems [10]. Ultimately, the Jaguar Land Rover cyber-attacks cost an estimated total damage of £1.9 billion for the UK economy, making it widely regarded as the most damaging cyber-attack in British history [11].
United States of “Tariffs”
The second presidency of Donald Trump has a significant impact on international trading. From the establishment of 25% tariffs on steel and aluminum imports on March 12th, to “Liberation Day” tariffs that placed a universal 10% rate for all imports on April 2nd, and the latest country-specific tariffs that came into effect on August 7th. Throughout the course, multiple tariffs were delayed or paused to prioritize negotiations for trade deals [12].
This, of course, has been affecting UK businesses. There is a negative relationship between firm investment and United States trade uncertainty, in which the higher the uncertainty (such as delays of country-specific tariffs, negotiations of trade deals, and threats of imposing other tariffs), the lower investment will be. According to the London School of Economics and Political Science, as the US trade uncertainty increased towards the first quarter, business investment growth declined to 0.1%. A rise in trade uncertainty was also expected to cause a smaller output gap near zero percent, which indicates that the UK economy is performing relatively to its potential, though it also means that their real GDP is contracting [13].
UK exports are directly influenced by Donald Trump’s tariffs. This year the value of UK exports dropped below £77,000 million in April, June, and September - just a month after certain protectionism measures came into effect [14].
The November 2025 Budget [16]
At 12:35 GMT, after a lengthy meeting in 11 Downing Street, on November 26th, the 2025 Budget was announced by Chancellor of the Exchequer Rachel Reeves in the House of Commons Chamber. Compared to the 2024 Budget, the first budget of the Starmer ministry, changes have been made to the UK’s fiscal policy.
According to the OBR Report, which was leaked before the announcement and includes the 2025 Budget, £26 billion pounds of extra taxes will be raised by 2029-30 as a result of tax hikes. Meanwhile, fuel duties are frozen until September 2026 with staged increases, costing about £2.4 billion next year and bringing in £900 million each year afterwards, household energy bills will be cut through cuts to green levies and the Tories’ Eco energy scheme, saving households £150 from the average household energy bill from April.
The Report also mentions the removal of the two-child benefit cap from April 2026, costing an estimate of £2.3 billion in 2026-27 and £3 billion by 2029-2030. Changes to cash individual savings accounts are announced by the Chancellor of the Exchequer, with £8,000 in the £20,000 allowance designated exclusively for investment purposes. Meanwhile, all payments from the Infected Blood Scheme will be exempt from the Inheritance Tax and £820 million is going to fund a new “youth guarantee” over the next three years, which promised every 18-to-21-year-old in England access to apprenticeship, training and education opportunities or help to find a job, according to the Chancellor. As Reeves commits to providing £5 million for libraries and £18 million for improving and upgrading playgrounds across England, she claimed the Conservatives “left classrooms crumbling and waiting lists sky-high; weakened our productivity and choked our economic growth”.
The chancellor also raised the national minimum wage from £7.55/hour to £8/hour for 16-to-18-year-olds, from £10/hour to £10.85/hour for 18-to-21-year-olds and from £12.21/hour to £12.71/hour for those 21 or older. The Government will also introduce “permanently lower tax rates” for more than 750,000 retail, hospitality and leisure properties, funded through higher rates on properties worth £500k or more. Also according to the Budget announced by the Chancellor of the Exchequer, an additional £820 million is allocated to the Scottish Government, £505 million for the Welsh Government and £370 million for the Northern Ireland Executive, while 7 majors receive £13 billion of flexible funding.
The OBR also upgraded Britain’s growth from 1% to 1.5% for this year, but economic growth forecasts are downgraded from projections in March (1.4% in 2026 from 1.9%, 1.6% in 2027 from 1.8%, 1.5% in 2028 from 1.7% and 1.5% in 2029 from 1.8%). Meanwhile, the Report also confirms a new mileage tax on electric vehicles (EV), more specifically on electric and plug-in hybrid cars from April 2028 at £0.03 per mile for battery electric cars and £0.015 per mile for plug-in hybrid cars, with the rate increasing annually with CPI, raising £1.4 billion. The mansion tax is also confirmed as “a high-value council tax surcharge on properties worth over £2 million”, an annual charge of £2,500 for properties worth over £2 million and £7,500 for properties worth over £5 million, raising £400 million. Meanwhile, salary-sacrificed pension contributions above an annual £2,000 threshold will no longer be exempt from National Insurance from April 2029 onwards, projecting to raise £4.7 billion and £2.6 billion in 2030-31. Also in the Report, the tax increases will bring the tax take to an all-time high of 38% of GDP in 2030-31, and bring in a total of £26 billion extra by 2029-30.
The £26 billion tax increase includes, in addition to the aforementioned tax increases, freezing tax thresholds on personal tax and employer National Insurance contributions thresholds for three years from 2028-29 (raising £8 billion), increasing the tax rates on dividends, property and savings income by 2 percentage points (raising £2.1 billion), reducing the writing down allowance main rate in corporation tax (raising £1.5 billion), increasing gambling taxes from 21% to 40% and duties on online gambling from 15% to 25% (raising £1.1 billion), reducing capital gains tax relief on disposals to employee ownership trusts (raising £900 million), applying tax administration, compliance and debt collection measures (raising £2.3 billion) and a range of other tax measures raising a total of £4.4 billion. Meanwhile, income tax and National Insurance thresholds will be frozen until the 2030-31 financial year.
During the Budget Announcement, the Chancellor of the Exchequer claimed that the “budget measures are the right choices for a fairer, a stronger, and a more secure Britain”. According to the Chancellor, borrowing will fall as a share of GDP in every year of the forecast, and the Government will meet its stability rule a year early as she “more than double” the headroom against her stability rule to £21.7 billion.
Meanwhile, the Net Financial Debt this year will be £2.6 trillion, 83% of GDP, meaning 1 in every £10 the Government spends is on debt interest. The current budget balance, also according to the Chancellor, is in deficit by £28.8 billion and it will move to a surplus of £3.9 million in 2028-29, £21.7 billion in 2029-30 and £24.6 billion in 2030-31. The public sector borrowing is due to be 3.5% of GDP in 2026-27, 3.0% in 2027-28 and 2.6% in 2028-29. Inflation will also be down by 0.4% next year, according to the OBR, which Rachel attributes to Labour’s actions on bills and prices. The Chancellor also stated that the Government has managed to chase down almost £400 million from what she calls “dodgy pandemic spending and contracts” and dubs as “Tory contracts, handed out to Tory peers by Tory ministers”. She also criticises Reform UK, who she says “promise more than £100 billion of cuts with no detail on where those cuts will come from” which she claims as “a recipe for devastating damage to public services”. Closing her announcement, the Chancellor says that she has “cut the cost of living” while “keeping every single one” of Labour’s manifesto commitments, and she adds that these are “the Labour choice”.
After the Budget announcements, the Leader of the Opposition Kemi Badenoch responds with fire. She jokes that the Budget should be Reeves's last Budget, and describes the few days prior to the announcements as a “total humiliation”, calling the 2025 Budget “a smorgasbord of misery” and “a Budget for Benefits Street paid for by working people”, and that the Chancellor had “broken every single one of her promises” and “if she had any decency she would resign”. According to the Leader of the Opposition, higher borrowing costs came from the Chancellor’s lack of grip and the Government is paying more to borrow than at any point during the Tories’ 14-year rule. Mentioning the early leak of the OBR Report, the Right Honourable Lady calls Rachel Reeves “the first Chancellor to release the Budget ahead of time”. A chant was led and Tory MPs joined in: “Welfare spendings - up! Universal credit claimants - up! Debt interest - up! Inflation - up!”; “Growth - down! Investment - down! Business confidence - down!”. At the end, Kemi asks if the Chancellor of the Exchequer has “any sympathy” for those “facing Christmas without a salary” because of Labour’s job tax, and claims that the Labour Party should be renamed “the Welfare Party”.
The Leader of the Liberal Democrats Ed Davey says in his response that Rachel “has diagnosed the disease but not administered the cure”, that “you can’t tax your way to growth” and the solution to an “all-time high” tax burden is a new trade deal with Europe, while Reform UK Leader Nigel Farage comments in a news conference that “working people are going to be subsidising a welfare bill that shows no sign of going down whatsoever” and that the UK “is in a doom loop and no one seems to recognise it, neither the last Conservative government nor this Labour government”.
Before the Budget announcements, during the weekly Prime Minister’s Questions, attacks were made by Badenoch about the early leak of the OBR Report, with the Right Honourable Lady calling the leak “complete shambles”. In response to this attack, Prime Minister Kier Starmer hits back by calling the Liz Truss 2022 mini-budget “the biggest shambles”.
CITATIONS
[1]: “Gross Domestic Product: Quarter on Quarter growth: CVM SA %”. Office of National Statistics. November 13, 2025. URL https://www.ons.gov.uk/economy/grossdomesticproductgdp/timeseries/ihyq/pn2
[2]: “United Kingdom Inflation Rate”. Office of National Statistics, illustrated by Trading Economics. URL https://tradingeconomics.com/united-kingdom/inflation-cpi
[3]: “United Kingdom Unemployment Rate”. Office of National Statistics, illustrated by Trading Economics. URL https://tradingeconomics.com/united-kingdom/unemployment-rate
[4]: “United Kingdom Balance of Trade”. Office of National Statistics, illustrated by Trading Economics. URL https://tradingeconomics.com/united-kingdom/balance-of-trade
[5]: Collier, Kevin. “A hack impacting Jaguar Land Rover was so bad that it hurt the U.K.'s GDP, Bank of England says” . National Broadcasting Corporation. November 11, 2025. URL https://www.nbcnews.com/tech/security/jaguar-land-rover-hack-hurt-uk-gdp-bank-england-says-rcna243083
[6]: Vallace, Chris and Theo Leggett “Jaguar Land Rover production severely hit by cyber-attack“. British Broadcasting Corporation. September 3, 2025. URL https://www.bbc.com/news/articles/c9wywvllq7wo
[7]: Young, Sarah. “Jaguar Land Rover cyberattack shutdown to hit four weeks”. The Irish Times. September 23, 2025. URL https://www.irishtimes.com/business/2025/09/23/jaguar-land-rover-cyberattack-shutdown-to-hit-four-weeks/
[8]: Rack, Susie. “JLR hack could see thousands laid off - MP”. British Broadcasting Corporation. September 18, 2025. URL https://www.bbc.com/news/articles/cwyrqxj3eqqo
[9]: “United Kingdom Car Production". The Society of Motor Manufacturers and Traders Limited (SMMT), illustrated by Trading Economics. URL https://tradingeconomics.com/united-kingdom/car-production
[10]: Burgess, Matt. “A Cyberattack on Jaguar Land Rover Is Causing a Supply Chain Disaster”. Wired. September 22, 2025. URL https://www.wired.com/story/jlr-jaguar-land-rover-cyberattack-supply-chain-disaster
[11]: Pearson, James. “Jaguar Land Rover hack cost UK economy an estimated $2.5 billion, report says”. Reuters. October 22, 2025. URL https://www.reuters.com/sustainability/boards-policy-regulation/jaguar-land-rover-hack-cost-uk-economy-25-billion-report-says-2025-10-22
[12]: Lowell, Micheal et al. “Trump 2.0 Tariff Tracker”. ReedSmith. November 20, 2025. URL https://www.tradecomplianceresourcehub.com/2025/11/20/trump-2-0-tariff-tracker/
[13]: Milas, Costas. “Trump’s tariff wars and their impact on the UK economy in five graphs”. London School of Economics and Political Science. March 24, 2025. URL https://blogs.lse.ac.uk/businessreview/2025/03/24/trumps-tariff-wars-and-their-impact-on-the-uk-economy-in-five-graphs/
[14]: “United Kingdom Exports”. Office of National Statistics, illustrated by Trading Economics. URL https://tradingeconomics.com/united-kingdom/exports
[16]: Ahmed, Nabiha. "Budget 2025: 'Fair and necessary' choices or a 'truly dismal' future?". British Broadcasting Corporation. November 17, 2025. URL https://www.bbc.com/news/live/cy8vz032qgpt?post=asset%3A05311675-9d3c-461f-8590-da7cc2cfa3c4#post
"Budget 2025". HM Treasury. November 27, 2025. URL https://www.gov.uk/government/collections/budget-2025
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