The UK economy continues to falter as the Labour Government comes under mounting pressure.
Reeves (Image: Getty)
The UK economy contracted by 0.1% in October, the Office for National Statistics (ONS) said, dealing yet another blow to Chancellor Rachel Reeves. The fall in gross domestic product (GDP) comes despite economists predicting 0.1% growth. Britain’s services sector dropped by 0.3%, and construction 0.6%. However, the production industry bucked the trend, actually growing by 1.1%.
Despite this bit of hope, GDP on a rolling three-month basis up until October was down by 0.1%. Experts had warned that consumer spending would be low in the run-up to the Chancellor’s second Budget in November, as people expressed concerns over the impacts of her fiscal measures.
The service and construction sectors both fell. (Image: Getty)
ONS director of economic statistics Liz McKeown said: “Within production, there was continued weakness in car manufacturing, with the industry only making a slight recovery in October from the substantial fall in output seen in the previous month.”
The economy also contracted 0.1% in September amid the cyber attack on Jaguar Land Rover that caused a shutdown.
In the wake of the new figures being released, the pound slipped 0.1% to the dollar, to $1.338.
Overall growth has been slowing throughout the year, going from 0.7% in the first quarter to 0.3% in the second.
Last month, the Office for Budget Responsibility (OBR) increased its 2025 growth forecast from 1% to 1.5%. However, it also reduced its 2026 growth forecast to 1.4%, a drop of 0.5%.
The Treasury said the Government is working to boost economic growth by reducing energy bills and making major infrastructure investments.
A spokesperson said: “We 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.”
