\n<\/p>\n
Britain\u2019s economy shrank unexpectedly in October as consumers held back on spending before Rachel Reeves\u2019s budget, and car manufacturing struggled to recover from the cyber-attack on Jaguar Land Rover.<\/p>\n
Figures from the Office for National Statistics (ONS) showed gross domestic product fell by 0.1%, after a 0.1% drop in output in September. City economists had predicted a 0.1% rise in October.<\/p>\n
After a fourth consecutive month without growth, economists said the latest snapshot would probably cement a Bank of England interest rate cut next week amid fading inflationary pressures, fears over the sluggish outlook, and rising unemployment.<\/p>\n
The Bank is widely expected to cut rates by a quarter of a percentage point to 3.75% when it announces its latest decision on 18 December.<\/p>\n
\u201cThe UK economy has faltered more dramatically than we expected,\u201d said Andrew Wishart, a senior UK economist at Berenberg. \u201cThis loss of momentum will bring inflation down more swiftly than we previously anticipated, allowing the BoE to act.\u201d<\/p>\n
Highlighting caution among businesses and households in the run-up to the chancellor\u2019s tax-raising budget, the ONS said a sharp 0.3% decline in output in Britain\u2019s dominant service sector contributed most to the fall.<\/p>\n
Much of the decline was driven by a weakness in car sales and broader retail spending, alongside a slump in computer programming and consultancy activities. Construction output fell by 0.6%, while the production sector \u2013 which includes manufacturing \u2013 rose by 1.1% amid a recovery from the JLR attack that was weaker than hoped for.<\/p>\n
GDP graphic<\/p>\n
The ONS said businesses across all three main sectors of the economy \u2013 services, production and construction \u2013 reported that they, or their customers, were \u201cwaiting for the outcomes of the budget\u201d. The biggest impact was felt by manufacturers, construction companies, wholesalers, computer programmers, real estate firms and employment agencies.<\/p>\n
Scott Gardner, an investment strategist at JP Morgan Personal Investing, said the chancellor\u2019s budget had a \u201cnumbing effect\u201d on the economy. He said: \u201cBudget speculation and uncertainty around potential tax changes dampened the mood among businesses and consumers, leading some to delay key decisions until the budget had been delivered.<\/p>\n
\u201cWith growth now firmly in the slow lane, there is a clear feeling that the economy this year has taken two steps forward and one step back.\u201d<\/p>\n
Financial markets widely expect the Bank to cut interest rates for a sixth time since last summer at its next policy meeting on Thursday. Threadneedle Street has said Reeves\u2019s policies \u2013 including relief on energy bills, prescription charges and fuel duty \u2013 could cut headline inflation by as much as half a percentage point next year.<\/p>\n
Mel Stride, the shadow chancellor, said the government\u2019s \u201ceconomic mismanagement\u201d had directly contributed to the weakness in economic growth.<\/p>\n
A Treasury spokesperson said: \u201cWe are determined to defy the forecasts on growth and create good jobs, so everyone is better off, while also helping us invest in better public services.\u201d<\/p>\n
Over the three months to the end of October, GDP also fell by 0.1%, below City estimates for zero growth over the period.<\/p>\n
Economic output fell in September after hackers breaching JLR\u2019s systems resulted in the country\u2019s second-largest carmaker halting its UK production lines for several weeks.<\/p>\n
In an incident estimated to have cost the economy at large up to \u00a31.9bn, the halt crippled hundreds of smaller companies in the manufacturer\u2019s supply chain, causing monthly output in the car industry to collapse by a third.<\/p>\n
However, the ONS warned there had only been a \u201csmall recovery\u201d in output in October as activity rebounded by 9.5%, leaving the industry still 21.8% below the levels seen in August. Overall manufacturing output rose by 0.5%, falling short of City estimates for a 1% recovery from the JLR attack.<\/p>\n
Sanjay Raja, the chief UK economist at Deutsche Bank, said the latest monthly fall in overall GDP increased the chances of a drop in fourth-quarter output. \u201cThe road to the new year will be bumpy,\u201d he said. \u201cBudget uncertainty combined with weak hiring and rising unemployment fear will likely see spending and investment more subdued to end the year.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Britain\u2019s economy shrank unexpectedly in October as consumers held back on spending before Rachel Reeves\u2019s budget, and car manufacturing struggled to recover from the cyber-attack on Jaguar Land Rover. Figures from the Office for National Statistics (ONS) showed gross domestic product fell by 0.1%, after a 0.1% drop in output in September. City economists had<\/p>\n","protected":false},"author":1,"featured_media":37215,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[113,1111,1271,1404,1858,3841,871,20620,4237],"class_list":{"0":"post-37214","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-budget","9":"tag-data","10":"tag-economic","11":"tag-economy","12":"tag-gdp","13":"tag-growth","14":"tag-shows","15":"tag-shrank","16":"tag-unexpectedly"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/37214","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37214"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/37214\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/37215"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37214"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}