By Comfort Asemota
Britain’s economy unexpectedly contracted again in October, according to official figures released on Friday, undermining the Labour government’s efforts to revive growth.
The Office for National Statistics reported that GDP slipped by 0.1% in October, following a similar 0.1% decline in September.
Economists had anticipated a modest 0.1% expansion for the month.
Manufacturing activity improved due to Jaguar Land Rover resuming production after a cyberattack that had disrupted operations and weighed on economic output in September.
However, analysts noted that both households and companies cut back on spending ahead of the government’s widely anticipated annual budget.
“Businesses and consumers were preparing for tax increases, and the constant speculation and leaks effectively stalled economic momentum,” said Lindsay James, investment manager at Quilter.
Last month’s budget saw Prime Minister Keir Starmer’s Labour government raise taxes in an effort to reduce public debt and strengthen funding for public services.
Alongside the budget, forecasts showed that the UK’s economic growth outlook has been downgraded from next year through to 2029.
Chancellor Rachel Reeves had already increased taxes on businesses in her first budget last year—moves that have been linked to sluggish growth and rising unemployment. She returned in November with additional tax rises affecting workers.
Analysts said Friday’s figures reinforced expectations that the Bank of England could cut interest rates at its meeting next week.
