UK economy unexpectedly shrank in October

The UK financial system unexpectedly shrank in October, in accordance with official figures, dealing a blow to the brand new authorities’s progress pledge.

GDP fell 0.1 per cent within the month, knowledge from the Workplace for Nationwide Statistics confirmed. Economists had anticipated a return to modest progress of 0.1 per cent.

It marks the second straight month of contraction after the financial system shrank 0.1 per cent in September.

The ONS’ knowledge confirmed progress within the companies sector was flat in October, whereas manufacturing fell 0.6 per cent and building fell 0.4 per cent.

The pound fell 0.32 per cent towards the greenback in response to the numbers.

The figures for October mirror the financial system’s efficiency within the run-up to the brand new authorities’s first Finances on the finish of the month, which elevated taxes by £41bn per 12 months.

UK enterprise confidence has slumped for the reason that Finances as main corporations warn tax-raising measures like a hike in employers’ nationwide insurance coverage contributions will push up costs and stall hiring.

The Confederation of British Trade now expects Britain’s financial system to develop by simply 1.5 per cent subsequent 12 months, it stated in its newest financial forecast, a sizeable downgrade from the 1.9 per cent it predicted for 2025 in June.

Prime minister Keir Starmer has vowed to spice up GDP progress to 2.5 per cent a 12 months – an bold goal after simply 0.3 per cent enlargement in 2023.

Financial institution of England policymakers are anticipated to depart rates of interest on maintain at 4.75 per cent at their subsequent assembly on 19 December, having lowered borrowing prices twice this 12 months from a submit financial-crisis excessive.

This can be a growing story.