The UK’s economy experienced an unexpected contraction of 0.1% in October due to declines in construction and production, with the dominant services sector stagnating. This decline follows a sluggish growth of 0.1% in the third quarter of the year.
The UK’s economy experienced an unexpected contraction of 0.1% in October, according to the Office for National Statistics (ONS). This decline was driven by falls in construction and production, while the dominant services sector stagnated.
The ONS reported that production output fell by 0.6% in October due to declines in manufacturing, mining, and quarrying. Construction also fell by 0.4%. The services sector showed no growth overall, with some industries experiencing weak months, such as oil and gas extraction, pubs and restaurants, and retail.
The unexpected fall in GDP underlines the scale of Labour’s challenge to get the economy growing. Economists had expected a growth of 0.1%, but the actual figure was negative. This contraction may indicate that the economy shrank for the fourth quarter as a whole.
Chancellor Rachel Reeves described the figures as “disappointing” but emphasized Labour’s commitment to delivering long-term economic growth. Business groups have complained about measures announced in the budget, including an increase in employer national insurance contributions, which they believe add to their costs and deter investment.
Liz McKeown, director of economic statistics at the ONS, stated: “The economy contracted slightly in October, with services showing no growth overall and production and construction both falling.”
Paul Dales, chief UK economist at Capital Economics, noted: “It’s hard to tell how much of the fall is temporary as activity was put on hold ahead of the budget. There is every chance that the economy went backwards in the fourth quarter as a whole.”
The economy shrank by 0.1% in October, driven by declines in construction and production, while the dominant services sector stagnated.
Economists had expected the economy to grow by 0.1%. This follows a decline of 0.1% in September and sluggish growth of 0.1% in the third quarter of the year.
While the figures this month are disappointing, we have put in place policies to deliver long-term economic growth,” said Rachel Reeves, the Chancellor. “We are determined to deliver economic growth as higher growth means increased living standards for everyone, everywhere.
The UK’s economy has been facing challenges, with a range of companies planning to slow spending and hiring after Labour’s budget in October, which included £40bn of tax rises. Business groups have complained that measures announced in the budget add to their costs and deter investment. Keir Starmer said last week it was the government’s “aim” to make the UK the fastest-growing G7 economy, while pledging to deliver higher real household disposable income by 2029.
- theguardian.com | UK’s economy shrinks unexpectedly by 0.1% in October
