UK economy shrank unexpectedly in October
The UK economy shrank unexpectedly in October, according to the latest official figures.
The Office for National Statistics (ONS) stated that the economy contracted by 0.1%, while economists expected the economy to grow by 0.1%.
The economy also shrank by 0.1% in the three months to the end of October as manufacturing output fell and services growth stalled, the ONS said.
ONS director of economic statistics Liz McKeown said: “In terms of manufacturing, there was continued weakness in car manufacturing, with the industry only recovering slightly in October from the significant decline in output seen in the previous month.” he said.
The government has made economic growth one of its main priorities.
A Treasury spokesman said the government was trying to boost economic growth by reducing energy bills and major infrastructure investments.
“We are determined to challenge growth forecasts and create good jobs so everyone is better off, while also helping us invest in better public services,” the spokesman said.
Shadow chancellor Sir Mel Stride blamed the Budget for the unexpected economic contraction.
“Rachel Reeves has misled the British public for months. She said she would not increase taxes on working people, a promise she broke once again. She insisted there was a black hole in the public finances, but in fact there was no such thing.”
Manufacturing output contracted by 0.5% in the three months to October, largely due to a 17.7% decline in vehicle production.
A cyber attack on Jaguar Land Rover halted production at its UK factories throughout September. Gradual return to factory activities starting from the beginning of October.
The resumption of vehicle production helped boost manufacturing output, which rose 1.1% across the UK that month.
However, the ONS noted that the recovery in vehicle production was small as it was still well below the levels seen in August.
The services sector, which includes areas such as professional services and retailing, It did not grow at all in the three months until October.
Ruth Gregory, vice president of UK economist at Capital Economics, said the surprise contraction in the economy strengthens the possibility of the Bank of England cutting interest rates at its meeting next week.
“It is remarkable that the economy has grown in only one of the last seven months,” he said.
Jack Meaning, chief UK economist at Barclays Bank and a former adviser to the Bank of England, told the BBC’s Today program that the figures showed the economy was “clearly weak”.
“This continues the story that we’ve seen more or less throughout this year, where growth has slowed from relatively strong numbers at the beginning to much weaker numbers now, and there’s actually outright contraction,” he said.
“Ultimately part of the story today is that we haven’t seen as much of a turnaround as we expected from the closure of Jaguar Land Rover. We thought they would bounce back pretty quickly; it looks like it might take a little bit longer.”
Mr Meaning added that data from Barclays showed uncertainty ahead of the Budget was putting pressure on the economy as people “put off purchases and big spending decisions”.
