THE UK economy contracted in October, according to official data released Friday, adding pressure to the Labour government’s plans to improve economic growth.
The Office for National Statistics said gross domestic product fell 0.1 per cent in October. GDP had also declined 0.1 per cent in September.
Analysts had expected a 0.1 per cent rise.
Manufacturing activity recovered in October after Jaguar Land Rover restarted operations. The cyberattack that affected the company in September had impacted economic output.
Analysts said businesses and consumers reduced spending ahead of Britain’s annual budget.
“Business and consumers were braced for tax hikes and the endless speculation and leaks have once again put a brake on the UK economy,” Lindsay James, investment manager at Quilter, said.
Prime minister Keir Starmer’s Labour government raised taxes in last month’s budget to reduce state debt and support public services.
The budget release also included a downgrade of Britain’s economic growth outlook from next year through 2029.
Finance minister Rachel Reeves had increased business taxes in her first budget last year, a decision widely linked to weak economic growth and higher unemployment. In November, she introduced further tax increases aimed at workers.
Analysts said the latest data added to expectations that the Bank of England could cut interest rates next week.
