Key Points
- UK GDP fell 0.1% in October
- Economy contracted for a second consecutive month
- Manufacturing rebounded as Jaguar Land Rover resumed operations
- Businesses and consumers curbed spending ahead of the annual budget
- Expectations of a Bank of England interest rate cut strengthened
LONDON: Britain’s economy unexpectedly contracted again in October, official data showed Friday, dealing a blow to the Labour government’s hopes of reviving economic growth.
Gross domestic product fell 0.1 percent in October following a contraction of 0.1 percent in September, the Office for National Statistics said in a statement.
Analysts had forecast growth of 0.1 percent.
Manufacturing rebounded in the month as carmaker Jaguar Land Rover resumed operations after a cyberattack that had weighed on the UK economy in September.
But analysts noted that businesses and consumers reined in spending ahead of Britain’s highly-expected annual budget.
“Business and consumers were braced for tax hikes and the endless speculation and leaks have once again put a brake on the UK economy,” said Lindsay James, investment manager at Quilter.
Prime Minister Keir Starmer’s Labour party raised taxes in last month’s budget to slash state debt and fund public services.
At the same time, Britain’s economic growth was downgraded from next year until the end of 2029, according to data released alongside the budget.
Finance minister Rachel Reeves raised taxes on businesses in her inaugural budget last year — a decision widely blamed for causing weak UK economic growth and rising unemployment, reports AFP.
She returned in November with fresh hikes, this time hitting workers.
Analysts said that Friday’s data strengthened expectations that the Bank of England would cut interest rates next week.
