UK Economy in the Red: Two Straight Months of Negative Growth
According to the Office for National Statistics (ONS), the United Kingdom’s economy slipped by 0.1% in October, marking the second consecutive month of shrinkage. This dip nudges the country firmly onto the recession radar.
Chancellor’s Take
Rachel Reeves described the numbers as “disappointing,” underscoring that the Labour government’s chief mission is to lift the economy so that families feel richer in their pockets.
“The figures are down, but rewiring a decade of sluggish growth won’t happen overnight,” Reeves noted. “We’re still pushing for momentum, and the policies ahead should help turn the tide.”
What’s What in October
The ONS highlighted a bleak month for service sectors, with pubs, restaurants, oil and gas extraction, and retail all underperforming. Telecoms, logistics and legal firms offered a few bright spots, but the overall picture remained gloomy.
- Goods & services: no growth
- Construction & production: declines
- Telecoms, logistics, legal: modest upticks
Experts Weigh In
Liz McKeown (ONS economic statistics director) pointed out that while the last three months show a slight overall uptick, October’s contraction still threatens future momentum.
Debapratim De (Deloitte research director) warned that winter growth may stay weak until the forthcoming Budget‑driven public spending kick‑in. He added that a BoE rate cut remains unlikely amid inflationary pressures.
Julian Jessop (Institute of Economic Affairs fellow) argued that the UK’s output per capita has slipped for a second quarter running. He noted that Europe’s manufacturing sectors mirror this slump, especially Germany and France.
“Negative sentiment from the summer’s rhetoric and a tight Budget are putting households and businesses on the pause button,” Jessop said. “Legal services were one bright spot, showing that tax lawyers still found a silver lining.”
Jessop also examined the Budget’s hefty spending and tax hikes, stressing that shifting 2% of national income to the public sector risks disrupting the economy, especially given productivity gaps.
Signs of Hope?
The latest GfK survey hints at a glimmer: consumer confidence crept up in December, with personal finances looking more optimistic. Real incomes could recover further, while unemployment remains low.
Yet business confidence lags, with firms still wary of the upcoming tax and cost increases slated for next April.
Bank of England Outlook
BoE staff now project a 0.3% growth in Q4, but the Committee may soon shift focus towards downside risks, balancing growth expectations against inflation threats.
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