Would only fail an mot if structural or in the case of that arch had rough or sharp pretruding edges but thats not serious..yet! suprised to see that on an 8th gen...my 7th has nothing like that...yet! lol
My 8th gen in same colour has it in same location only it's just starting. Get yourself a little tube of the tcut or carplan scratch remover and it'll clean off all that orange rust staining. That's all that orange stuff is, the rust is underneath the bubbled paint.
Then get one of those touch up kits from Halfords that has the lacquer included and paint some on the bubble spots making sure to go slightly over to the good surrounding area and seal it keeping the oxygen and water from getting to the metal underneath. This is a good method to slow it down considerably if not stop it getting worse until you can get round to tackling it to get it back to perfectly flat and painted
I disagree, skip the touch up paint and remove the rust thoroughly, seal it with a good anti rust primer, if it's an eyesore you're more likely to get it sorted sooner
If the paint has bubbled up there is already moisture inside, and sealing the pinholes or cracks with touch up paint will neither solve nor postpone anything
If it's anything like the gen 7 the cause is mud and detritus trapped behind the plastic inner arch and the inner wing, no point doing anything external unless that's sorted as it 'll just be back in a few months.
Had that on a couple of VW Passats I owned a few years ago. Very common rust issue. VW said it was Caused by a mechanical issue to get out of fixing it under the 12 year paint guarantee that the cars had. All starts on the inside of the wing so as said no point tarting up the outside.