00:00Walk us through why there was a downside surprise for Q3 GDP.
00:04Yeah, so, well, compared to our forecast at least, there were a couple of things.
00:07The first thing was export growth was a little bit weaker than expected, than we expected.
00:12And I think the story there is about a slowdown in global growth.
00:17A little bit faster and a little bit feeding through a little bit quicker to the UK than we expected.
00:22The UK is a small, open economy, so what happens in the global economy matters a lot for the UK.
00:27I think the other thing that we've noticed in the data is probably ongoing consumer caution.
00:33And that is a story that has been in the data for a while now.
00:36This story about high saving rate in the UK.
00:39Consumers put it, squirrelling away a little bit more cash every quarter.
00:44And that was in the data too.
00:46I mean, one other point just to add, there was an impact, particularly in September, with the JLR shutdown.
00:52Yes, Jaguar Land Rover.
00:53Jaguar Land Rover, exactly.
00:55That will be a temporary factor.
00:56So JLR is now back online.
00:58It's ramping up production.
00:59It's slow.
01:00But presumably, the data will then, in October and also probably November, show a pickup in manufacturing production.
01:06So you're going to get a pickup there.
01:08There is some temporary element to it, but there is some underlying weakness there as well, I think.
01:12Yeah, well, I mean, that will be a relief for the Chancellor, at least.
01:14And the global narrative that you're talking about chimes with what the Chancellor, Rachel Weaves, has been saying.
01:20How does it all set us up for her budget?
01:22So I think in the near term, I mean, this is a very near term picture that we're talking about.
01:28I think when you think about the budget, it sounds a bit crazy, but what you actually care about is the next five years.
01:34Yeah.
01:34And that's what the forecast, the OBR's forecast is about.
01:39And what the OBR will need to take a judgment on with this data, whether it makes it into their forecast or not, I probably won't, to be honest.
01:46But on the assumption that they had a weak second half of this year, the big judgment for the OBR is how much space there is for the economy to catch up and grow faster in the future.
01:58And that's set against this story that we're hearing in press reports about the OBR taking a more, or sorry, a dimmer view of the economy's medium term prospects.
02:08So in the medium term, we think the OBR might say the economy could grow maybe one and a half percent a year, whereas back in March, in its previous forecast, it was saying the economy could grow 1.7, 1.8 percent a year.
02:20Yeah.
02:21So they're, in the medium term, slower growth.
02:24And of course, that is the big reason why we're talking about potentially tax rises in the budget.
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