UK economy struggles for second consecutive month
(FILES) In this file photo taken on February 04, 2022 Shoppers walks past a clothing stall at a market in Walthamstow, east London. - Britain's economy shrank in the third quarter, official data showed on November 11, 2022 likely confirming it is already in a recession forecast to last some time. (Photo by Tolga Akmen / AFP)
Britain’s economy shrank for a second month in a row in October in the run-up to the government’s first budget, the first back-to-back falls in output since the onset of the COVID-19 pandemic, and a setback for new finance minister Rachel Reeves.
Gross domestic product contracted by 0.1% month-on-month in October, as it did in September, the Office for National Statistics said.
It was the first consecutive drop in monthly GDP – which is volatile and prone to revision – since March and April 2020, when Britain enforced its first coronavirus lockdown.
Economists polled by Reuters had forecast a monthly expansion of 0.1%.
The ONS said there was “mixed” anecdotal evidence from companies that turnover had been affected by companies waiting for the budget statement, which imposed large tax rises on businesses. Others brought forward activity.
The services sector flatlined, while output in the manufacturing and construction industries declined in October’s data, which measured the economy in the weeks before Reeves’ budget statement on Oct. 30.
Reeves and Prime Minister Keir Starmer – who made stronger economic growth the centrepiece of the Labour Party’s election campaign this year – had warned that the budget would include painful tax increases.
Friday’s data adds to a run of worse-than-expected figures for Britain’s economy, with business surveys and retail sales readings also falling flat.
“While the figures this month are disappointing, we have put in place policies to deliver long-term economic growth,” Reeves said in a statement.
The opposition Conservatives said the growth outlook was under serious pressure because of Labour’s first moves in power.
“It is no wonder businesses are sounding the alarm,” the Conservatives’ spokesman on the economy, Mel Stride, said. “This fall in growth shows the stark impact of the Chancellor’s decisions and continually talking down the economy.”
The National Institute of Economic and Social Research, a leading think tank, said it expected the economy would stagnate in the fourth quarter of 2024.
Reuters
