Stalled Growth: Britain's Economic Challenges Under Rachel Reeves

Britain's economy contracted by 0.1% in September, and growth slowed to 0.1% for the third quarter. Finance Minister Rachel Reeves plans regulatory reforms to boost growth. Business investment rose 1.2%, but economists warn of lingering challenges. Expectations were dampened by downgraded growth forecasts for 2024.

In a surprising economic turn, Britain saw its economy contract by 0.1% in September, as services stagnated and manufacturing and construction sectors took a downturn, according to the Office for National Statistics. This marks a setback for Finance Minister Rachel Reeves, who aims to rejuvenate the country's growth trajectory.

During the third quarter, the economy expanded by only 0.1%, slowing from 0.5% in the previous quarter. Analysts had predicted a 0.2% increase. Reeves voiced dissatisfaction with the results and pledged to stimulate growth through investment and reforms, emphasizing the importance of the 'crown jewel' financial industry in her strategy.

Despite the disheartening data, a 1.2% increase in business investment offered a glimmer of hope. The Bank of England recently revised its 2024 growth forecast to 1%, anticipating a potential uplift in 2025 due to Reeves's budget plans. Economists caution that new business taxes could dampen investment, as geopolitical uncertainties loom.

(With inputs from agencies.)