The UK economy unexpectedly shrank by 0.1 percent in October, marking its second consecutive monthly contraction, according to official data from the Office for National Statistics (ONS).
Economists had predicted a return to modest growth after September’s slump, but uncertainty ahead of October’s Budget and persistent interest rates have kept consumers and businesses from spending freely.
The ONS noted the weakest month for pubs, restaurants, and shops, while other professional job sectors such as real estate, law firms, and accountancy brought in work ahead of the Chancellor’s Budget announcement.
Chancellor Rachel Reeves described the figures as “disappointing” but insisted policies were in place to deliver long-term growth. Shadow Chancellor Mel Stride said the latest numbers showed the negative impact of government decisions and pessimistic economic messages.
Economists also highlighted that the economic slowdown may not be due to the results of the Budget alone. Paul Dales, UK chief economist at Capital Economics, said higher interest rates could weigh on employment more than expected. Although the Bank of England has cut interest rates twice this year, they remain higher than in previous years, which has discouraged spending and investment.
In the past five months, the economy has grown just once, and is now 0.1 percent lower than before workers started work in July. Despite the weak October figure, some experts, including HSBC’s Simon Wells, cautioned against reading too much into one month’s data, as initial estimates are often subject to revision.
In the three months to October, the economy still managed to grow at a modest 0.1 percent, offering a glimmer of hope as the near-term outlook remains uncertain.
