UK economy unexpectedly shrinks in September as JLR hack hammers production output – business live

8.45am GMT The London stock market has dipped in early trading as investors digest this morning’s weaker-than-expected UK growth data. The FTSE 100 index, which closed at a new high last night, is down 16 points or 0.16% at 9,895 points. Derren Nathan, head of equity research at Hargreaves Lansdown, says: “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. 8.34am GMT The UK economy is ‘running out of steam’ as we approach the crucial budget on 26 November, warns Fergus Jimenez-England, associate economist at the National Institute of Economic and Social Research. “Today’s GDP figures show a disappointing 0.1 per cent rise in the third quarter, with the economy running out of steam ahead of the Budget. Growth this quarter reflects base effects from an uneven previous quarter, with more recent monthly activity falling. We expect GDP growth this year to be stronger than last, but this is supported by government spending rather than private sector activity. With fiscal tightening widely expected in the Autumn Budget, the Chancellor must focus on restoring confidence by setting aside a larger buffer to reduce policy churn and uncertainty.” 8.32am GMT Today’s UK GDP data is bad news for unemployment, warns Professor Costas Milas of the Management School at University of Liverpool. He explains: Today’s GDP reading suggests that UK output gap (output relative to trend/equilibrium output) stood at -0.8% in 2025Q3, even worse than the -0.6% figure for 2025Q2. If anything, we are going downhill. The chart below shows the historical relationship between output gap and unemployment. When output drops below trend, unemployment rises. In my view, unemployment will rise well above 5.0%, which the Bank of England predicts for 2025Q4 and 2026Q1, not least because the Bank has the habit of underestimating unemployment. Things will get even worse as taxes are predicted to rise in the forthcoming Budget...Not a good day today for the UK economy. 8.28am GMT Shadow chancellor Mel Stride has blamed the government’s choices for the “very low” growth in the last quarter. In a video clip shot this morning, Stride argues: You put up taxes on businesses, if you spend a lot of money, stoke inflation, keep interest rates higher for longer as a consequence, mound up the national debt, end up paying huge servicing charges on that debt, then this is where, I’m afraid, you end up. Although the clip is shot in Westminster, it sounds like Stride is giving his views from a performance of theatrical show Stomp, as a stirring percussion soundtrack has been added…. BREAKING: The economy shrank in September. Here's why 👇🏻 pic.twitter.com/doRdAzsl5Q— Mel Stride (@MelJStride) November 13, 2025 [on his points: interest rates have been cut five times since last summer, and a 6th cut in December may be even more likely now the economy is strugging.] 7.59am GMT The UK fell behind France for growth in the last quarter, but did better than some other large European countries. Both Germany and Italy stagnated in July-September, while France bounced ahead with 0.5% growth in the quarter. Among oher G7 countries, Canada is estimated to have grown by 0.1% in the quarter. We don’t yet have Japan’s Q3 growth report, while the US GDP data has been delayed by the government shutdown which finally ended overnight. Updated at 8.16am GMT 7.42am GMT Reeves: more work to do Chancellor Rachel Reeves is harking back to the happier days of stronger growth in the first two quarters of this year. Responding to this morning’s GDP figures, Reeves says: “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. At my Budget later this month, I will take the fair decisions to build a strong economy that helps us to continue to cut waiting lists, cut the national debt and cut the cost of living.” 7.38am GMT Although the Jaguar Land Rover attack clearly hurt UK manufacturing badly, the drop in output in September is also part of a wider trend. As these charts show, production output has been falling for several months: 7.32am GMT Looking over the longer term, the ONS says, GDP is estimated to have grown by 1.3% in the three months to September 2025, compared with the same three months a year ago. Over this period services grew by 1.6%, construction grew by 1.5% whereas production fell by 0.9% – as the JLR cyber-attack hit output hard in September. Compared with the same month a year ago, GDP is estimated to be 1.1% higher in September 2025. 7.30am GMT The UK economy is clearly struggling to maintain momentum, warns Ruth Gregory, deputy chief UK economist at Capital Economic. Gregory tells clients this morning: Much of the 0.1% m/m fall in September and muted 0.1% q/q rise in GDP in Q3 was due to the hit to manufacturing activity caused by the Jaguar Land Rover cyber-attack, which will be reversed in Q4. Even so, the big picture is that the economy is struggling to gain decent momentum in the face of higher taxes and soft overseas activity. And with tax rises in the upcoming Budget likely to trim GDP by around 0.2% in 2026, there is little reason to think that GDP growth will accelerate much from here. 7.27am GMT Slowest quarterly growth since last recession as economy loses steam The meagre 0.1% growth recorded in July-September appears to be the slowest quarterly growth since the short recession in the second half of 2023. Lindsay James, investment strategist at wealth manager Quilter, warns that the economy is ‘badly losing steam’: “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. 7.13am GMT Chart: How growth has slowed in recent months Although the Jaguar Land Rover attack clearly caused a drop in activity (its UK factories were closed through September), there has also been a wider slowdown. This chart show how the rolling three month estimate of growth has weakened since the spring: 7.06am GMT JLR hack drove UK economy into unexpected contraction in September Ouch! The UK economy shrank in September, today’s GDP report shows, as the cyber-attack on Jaguar Land Rover hammered activity in the manufacturing sector. UK GDP fell by 0.1% in September, following no growth in August (revised down from a previous estimate of growth of 0.1%) and an unrevised fall of 0.1% in July. That’s an unwelcome surprise, City economists had expected GDP to be unchanged in the month. Production output fell by 2.0% in September, mainly because of a 28.6% decline in the manufacture of motor vehicles, trailers and semi-trailers – as the JLR ground to a halt for the whole month, disrupting its supply chain. That knocked 0.17 percentage points from monthly GDP. Services and construction output both increased by 0.2% in the month. September’s contraction pulled growth down to just 0.1% across the third quarter of the year (see earlier post). ONS Director of Economic Statistics Liz McKeown says: “Across the quarter as a whole manufacturing drove the weakness in production. There was a particularly marked fall in car production in September, reflecting the impact of a cyber incident, as well as a decline in the often-erratic pharmaceutical industry. Updated at 7.26am GMT 7.03am GMT UK economy grew 0.1% in July-September Newsflash: Growth across the UK economy has slowed in the third quarter of the year. UK GDP expanded by just 0.1% in July-September - down from 0.3% in April-June – a weak pace of growth. And if you adjust for population, there was no growth at all – with real GDP per head unchanged. The services sector grew by 0.2%, while construction expanded by 0.1% – and the production sector contracted by 0.5%. 6.47am GMT While we wait for the UK GDP report in 15 minutes, we also have evidence that the UK housing market cooled in October. Buyer demand, sales activity and new instructions all fell further into negative territory, the Royal Institution of Chartered Surveyors reports this morning. Surveyors strongly attribute the slowdown to mounting uncertainty ahead of the forthcoming Autumn Budget and potential tax-raising measures, RICS says. Related: Property experts urge Rachel Reeves to abolish ‘sin tax’ of stamp duty in budget 6.35am GMT Introduction: It's UK GDP Day Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. The UK economy will be under the microscope today, less than two weeks before a crucial budget. The latest GDP data, to be released at 7am, will show how the economy fared in September, and over the third quarter of this year. Economists predict small quarterly growth – of perhaps 0.2%, down from 0.3% in April-June. September could be trickier, though; the economy may have felt the chill of pre-budget uncertainty. It certainly faced disruption in the auto sector, with carmaker Jaguar Land Rover forced to suspend production for the month due to a cyber attack. The JLR hack drove car production at British factories to the lowest level for a September since 1952, which will surely hit the wider measure of activity. Related: Car production slumps to a 73-year low after JLR cyber-attack A poor GDP report will intensify the criticism of chancellor Rachel Reeves’s handling of the economy, as she prepares her budget statement on 26 November. Weak growth could also spur the Bank of England towards cutting interest rates again, with a December cut already looking quite likely…. The agenda 7am GMT: UK GDP report for September, and Q3 2025 7am GMT: UK trade report for September 9am GMT: IEA’s monthly oil market repor Noon BST: Bank of England policymaker Megan Greene: Panellist at Chatham house event ‘Is the age of central bank independence under threat?’