The UK economic system contracted by 0.1% in October, in keeping with official figures.
The shock fall in gross home product (GDP) – a measure of financial output – comes after an analogous surprising 0.1% drop in September and 0% development in August.
Commentators had warned that client spending was prone to be restrained within the run-up to November’s funds, amid considerations concerning the influence of Rachel Reeves’s potential measures on households and companies.
UK GDP has additionally been hit laborious by disruption to automobile manufacturing attributable to a cyber assault on Jaguar Land Rover.
The ONS stated that in October, the UK’s companies sector fell by 0.3%, whereas building was down 0.6%. Nonetheless, manufacturing grew by 1.1%.
It discovered that GDP on a rolling three-month foundation, to October, additionally fell by 0.1%.
The ONS’s director of financial statistics, Liz McKeown, stated: “Within production, there was continued weakness in car manufacturing, with the industry only making a slight recovery in October from the substantial fall in output seen in the previous month.
“Total companies confirmed no development within the newest three months, persevering with the latest development of slowing on this sector. There have been falls in wholesale and scientific analysis, offset by development in rental and leasing and retail.”
Interest rate cut ‘nailed on’
Commentators also blamed rumours and leaks in the run-up to the budget for dampening demand.
Scott Gardner, from banking giant JP Morgan, said that despite expectations of a return to growth, the economy continued to “battle a interval of inconsistent productiveness”.
He added: “Hypothesis about potential funds bulletins had a numbing impact on shoppers and companies within the lead as much as the chancellor’s speech on the finish of November.”
Suren Thiru, from the Institute of Chartered Accountants, stated the info elevated the chance of the Financial institution of England reducing rates of interest subsequent week.
He stated: “With these downbeat figures likely to further fuel fears among rate-setters over the health of the UK economy, a December policy loosening looks nailed on, particularly given the likely deflationary impact of the budget.”
Figures ‘extraordinarily regarding’
Barret Kupelian, chief economist at PwC, stated that whereas a number of the blame could possibly be attributed to the Jaguar Land Rover cyber assault, “the bigger story is that speculation around the autumn budget kept households and businesses in wait-and-see mode”.
He added: “Given the timing of the budget, November’s GDP print is likely to look similarly subdued before any post-budget effects start to show up.”
Sir Mel Stride, the Tory shadow chancellor, described the figures as “extremely concerning”, claiming they have been “a direct result of Labour’s economic mismanagement”.
A Treasury spokesperson stated: “We are determined to defy the forecasts on growth and create good jobs, so everyone is better off, while also helping us invest in better public services.”
