London (AFP) – Britain’s economy shrank for the second consecutive month in October, official data showed Friday, dealing a blow to the Labour government that has made economic growth a priority. Gross domestic product fell 0.1 percent in October compared with September, when output declined by the same amount, the Office for National Statistics (ONS) said. The decline was unexpected by analysts, who had estimated that the economy would grow slightly.
“The figures this month are disappointing,” said finance minister Rachel Reeves, whose first budget in October featured big tax increases on businesses. “We have put in place policies to deliver long-term economic growth,” she added. Analysts have attributed part of the decline to uncertainty after the Labour government warned of “tough” measures in its budget at the end of October. ONS director of economic statistics Liz McKeown said that “oil and gas extraction, pubs and restaurants and retail all had weak months.”
Despite this, “the economy still grew a little over the last three months as a whole,” she said. Alongside tax increases in the budget, Prime Minister Keir Starmer’s government announced plans for higher borrowing that it said would be invested in infrastructure projects to help drive economic growth.
Against the backdrop of weak growth, the Bank of England is set to decide next week whether it will cut interest rates again. In November, the central bank trimmed borrowing costs by 25 basis points to 4.75 percent.
© 2024 AFP
