Essential Insights
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U.K. economic growth stagnated at 0.1% in Q3, significantly influenced by a major cyberattack on Jaguar Land Rover that halted production.
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The decline in growth and rising unemployment (now at 5%) present challenges for the government ahead of a critical budget, where tax increases are anticipated.
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Treasury chief Rachel Reeves indicated tax hikes, including a potential rise in the basic income tax rate, would be necessary to address rising debt and improve public services.
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The government’s low favorability ratings and disappointing economic data have prompted calls for a budget that fosters rather than hinders growth, amidst criticism from opposition parties.
[gptA technology journalist, write a short news story divided in two subheadings, at 12th grade reading level about ‘Cyberattack on car manufacturer hits UK growth in Q3 ahead of crucial budget’in short sentences using transition words, in an informative and explanatory tone, from the perspective of an insightful Tech News Editor, ensure clarity, consistency, and accessibility. Use concise, factual language and avoid jargon that may confuse readers. Maintain a neutral yet engaging tone to provide balanced perspectives on practicality, possible widespread adoption, and contribution to the human journey. Avoid passive voice. The article should provide relatable insights based on the following information ‘
LONDON (AP) — U.K. economic growth slowed down to a near standstill in the third quarter of the year after a cyberattack halted production at the country’s biggest automaker, official figures showed Thursday.
The slowdown represents a blow to the British government less than two weeks ahead of a crucial budget that is expected to see taxes rise again.
The Office for National Statistics said that the economy grew by 0.1% between July and September from the previous three-month period. That was down on the previous quarter’s 0.3% increase and below market expectations for a 0.2% rise.
The cyberattack on Jaguar Land Rover was a key reason why growth came in lower than expected. The attack, which saw workers sent home on Aug. 31, halted production in the company’s factories as well as suppliers. Operations restarted in October.
The shutdown rippled through the U.K. auto industry. JLR, which is owned by India’s Tata Motors, employs more than 30,000 people, with its supply chain supporting tens of thousands more jobs.
The impact was evident in the growth performance in September, with overall industrial output down 2% during the month and car and trailer manufacturing plunging by 28.6%, its sharpest fall since the height of the coronavirus pandemic in April 2020.
It is the latest set of disappointing economic data for the government after the statistics agency revealed earlier this week that U.K. unemployment has risen to 5%, its highest level for four years.
Statistics point towards a weakening economic backdrop ahead of the budget on Nov. 26, which the government has sought to blame on international factors, such as the uncertainty caused by U.S. tariffs.
Treasury chief Rachel Reeves would have been hoping that stronger economic growth could help bolster tax revenues and support spending plans.
“The numbers for this quarter clearly reflect what happened at Jaguar Land Rover: a massive cyberattack, the biggest cyberattack that this country has ever experienced,” she said.
Reeves has provided clear hints that she is going to have to raise taxes in order to cut debt, reduce hospital waiting lists and get inflation down.
She is widely anticipated to increase the basic rate of income tax, something no British government has done for 50 years. It would also break a key manifesto pledge of the Labour government.
It’s a high-stakes time for the government, which is languishing in the opinion polls barely a year-and-a-half after coming to power and Prime Minister Keir Starmer’s favorability ratings deep in negative territory.
Starmer has said that generating economic growth is his government’s central mission. Since the global financial crisis in 2008, the British economy’s growth rates have been lower than the decades before, and that’s had a knock-on impact on the government’s tax take and its ability to fund public services.
“The next challenge will be to ensure that the upcoming budget supports rather than hinders growth — no mean feat given the scale of fiscal consolidation that is expected,” said James Smith, research director at the Resolution Foundation.
Opposition politicians say Labour has done more harm than good since it came to power, and have pinned the blame largely on Reeves’ budget last year, which saw taxes raised on businesses.
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