HOW TO SLOW DOWN RUSTING

Grind away the paint and the affected rust areas, hope it's confined to the upper levels of the metal only, paint on some Kurust, clean that off, then fill, sand, prime, sand, paint, lacquer. If you've no bodywork skills, don't even attempt it, it'll look terrible from a mile away.

If you just want to arrest it for the moment then try some Owatrol oil. It is clear and it seals the rust. I find it better than hammerite simply because it takes a few hours to dry instead of a few minutes so it has plenty of time to soak in to the rust before it starts to cure. You can get it in some branches of woodies.

A proper job wil require the paint to be stripped back and all of the rust to be treated before repainting. If it were me, I would owatrol it now just to arrest the rust and get it to a good workshop for an inspection to make sure there are no structural problems caused by the rust and for an assessment of costs. If the outcome is positive, get a proper paint job done. If it is uneconomic to repair, start the search for a replacement vehicle.

Grind away any of the surrounding paint/schultz/stonechip barrier and see the extent of the rust. Cut out a square patch, and cut a new piece of steel to fit in the hole, weld in, grind any overweld flat and smooth, and then spray with new rubberised stone chip protection. You can get it in aerosol form from most motor factors.

If you haven't welded before, it's best to bring it to someone who has - and especially considering it's work being done under your car, doing it on your driveway with jacks and the like is dangerous. If you decide to do it anyway, disconnect the battery before welding.

I've a 99 Golf too but no signs of rust, was yours previously damaged? as I've heard they dont really rust unless previously resprayed etc.

To be honest I'd say trying to sand & respray that yourself would look worse unless you have experience previously. To slow it down you could try cleaning the area, applying something like Hammerite Kurst (will turn the rust a blue/black colour, painting over with touch up for your car & applying a aerosol lacquer to seal.
I'd also apply something like Hammerite waxoyl or underbody seal inside the wheel arches, you'll have to remove the wheel arch liner & mudguards to do that though.
I just applied some lacquer to some rust on my old car and it lasted a good while like that without spreading.

Also, remember to use a car shampoo rather than washing up liquid or something like that if you dont already, I use Autoglym's one which has rust inhibitors and in winter when the salt goes out on the roads rinse in and around the wheel arches once in awhile to take that off.