UK third quarter GDP cooling exceeds expectations, New Labour tax hike plan raises market concerns.

Due to growing concerns about the fiscal plans of the new Labour government, the UK economy unexpectedly contracted in September, with the third quarter cooling more than market expectations. Data released by the UK's Office for National Statistics on Friday showed that the country's Gross Domestic Product (GDP) grew by 0.1% compared to the previous quarter, below the 0.2% growth predicted by economists. Additionally, the economy shrank by 0.1% in September alone, much worse than the expected 0.2% growth. This data suggests that the UK economy is slowing down amid domestic and international economic pressures. In terms of industry, in September, the service industry remained flat, manufacturing shrank by 1%, with only construction showing some growth at 0.1%. Specifically, UK Prime Minister Keir Starmer had promised to raise the country's economic growth rate to 2.5% annually, making it the fastest in the G7. However, the latest data is disappointing. Although the UK economy was the fastest growing country in the G7 in the first half of the year, the growth rate in the third quarter slowed significantly compared to the 0.5% in the second quarter. Analysts believe that the reason for the economic slowdown may be due to concerns about the Labour government's budget, with consumer and business confidence declining significantly due to fears of potential tax increases. On October 30th, Labour announced a 40 billion tax hike, mostly borne by businesses, and these concerns materialized. The Office for National Statistics stated that these data show that the economy was already on a downward trend before the budget announcement, as weakened confidence among businesses and consumers led to the output decrease in the third quarter. Additionally, the global economic situation has become dim in recent weeks, with a new wave of protectionism triggered by Trump's election threatening the UK's economic prospects. Regarding the latest GDP data, Chancellor of the Exchequer Rachael Reeves expressed dissatisfaction, as boosting economic growth is at the core of her ambitions. Meanwhile, the pound remained on an upward trend after the data release, but is still expected to decline for the seventh consecutive week, marking the longest downward cycle in a decade. Liz Mckieion, the Office for National Statistics' Director of Economic Statistics, pointed out that economic slowdown has become a common phenomenon, with most industries showing weak growth in the third quarter. Although retail and new construction projects increased slightly, the telecommunications and wholesale industries experienced a decline. On a per capita basis, the economy shrunk by 0.1% this quarter, reflecting the impact of population growth. Economists predict that as the cost of living crisis gradually recedes and the Bank of England's rate cuts begin to take effect, economic growth will accelerate next year. However, the level of economic growth forecasted by the private sector remains significantly below Starmer's ambitious promises. The Bank of England is closely monitoring GDP data as it gradually reverses the 14 consecutive interest rate hikes to combat inflation policy. The bank has suggested a gradual interest rate cut, partly due to expectations of the budget re-igniting inflation. Overall, the UK economy showed a slowing trend in the third quarter, mainly influenced by factors such as the fiscal plans of the new Labour government, the global economic situation, and decreasing confidence among businesses and consumers. In the future, the UK economy will face more challenges and uncertainties, requiring concerted efforts from the government, central bank, and all sectors to address.