The latest figures from the Office for National Statistics (ONS) revealed that the 0.1% fall followed growth of 0.1% in the three months to September and 0.2% in the three months to August.
On a monthly basis, the ONS also estimated a 0.1% fall. This was the second consecutive month of shrinkage, following an identical fall of 0.1% in September and no growth in August, the latter of which was revised down.
The ONS reported that services and construction both fell by 0.3% and 0.6% respectively. However, production saw growth of 1.1%.
‘UK economy is going backwards’
Lindsay James, investment strategist at Quilter, said: “October’s GDP underscores just how much difficulty the UK economy is going through as the government searches for some sort of growth. Growth is estimated to have fallen by 0.1% in October, mimicking the 0.1% contraction seen in last month’s data and comes despite production output growing as Jaguar Land Rover restarted its operations following the cyber attack-induced shutdown. This figure also misses what were already low expectations and doesn’t bode well for next month’s figure either.
Aldermore Insights with Jon Cooper: Edition 5 – Feeling enthusiastic about next year’s run-of-the-mill market
Sponsored by Aldermore
“This fall in growth highlights the continuing trend of the past three months that have seen the already fragile levels of growth evaporate completely and go into reverse, with the three-month figure coming in at a 0.1% fall. Much of this can be put down to the Budget and the deterioration in consumer confidence, spending and business planning. Business and consumers were braced for tax hikes and the endless speculation and leaks have once again put a brake on the UK economy, just as it did last year. Corporate surveys across manufacturing and services indicate the economy has been slipping closer to stall speed, whilst unemployment has risen to 5% as employers reined in hiring amidst the uncertain outlook.”
She added: “Moving beyond the Budget and whilst many breathed a sigh of relief that many tax-raising measures are still some years away, the impact on growth was negligible. Indeed, the Office for Budget Responsibility (OBR) confirmed that no measures introduced will provide growth for the UK economy, and instead, it is going to need to be found elsewhere. This is in stark contrast to Europe, where growth expectations are being raised at the same time as UK ones are lowered. In effect, the UK economy is going backwards.
“These figures make it increasingly likely the Bank of England will have to lower rates next week when it meets, but with inflation remaining persistently high, the pace at which subsequent cuts can be delivered remains questionable.”
