UK Economy Fell Short of Expectations in the Third Quarter

UK Economy Sees Slow Growth in the Third Quarter

The Office for National Statistics (ONS) has announced growth figures for the third quarter of 2023. The report shows that the UK economy grew by only 0.1% compared to the previous quarter.

Why Were Market Expectations Not Met?

The general expectation in the markets was that the UK economy, which grew by 0.3% in the second quarter, would grow by 0.2% in the third quarter. However, the third quarter figures fell below these expectations.

Sectoral Growth and Contraction

Growth in the services sector was recorded at 0.2%, while the construction sector showed 0.1% growth. On the other hand, the manufacturing sector contracted by 0.5%.

Annual Growth and Monthly Contraction

In the third quarter of the year, the UK economy grew by 1.3% on an annual basis. However, in September, there was a monthly contraction of 0.1%.

Impact of Cyber Attack

One of the reasons for the weak growth in the third quarter was a sharp decline of 28.6% in motor vehicle production in September. This was recorded as the largest decline since the onset of the COVID-19 pandemic in April 2020.

The ONS highlighted that the Society of Motor Manufacturers and Traders (SMMT) reported that a cyber attack disrupted the production process of a major manufacturer. Luxury car manufacturer Jaguar Land Rover (JLR), owned by Tata Motors, had halted its production for about six weeks due to the cyber attack in August. JLR began ramping up production again at the beginning of October.

This cyber attack is estimated to have cost the UK economy approximately £1.9 billion.