Bank of England in the City of London on November 6, 2024 in London, United Kingdom. The City of London is a city, a ceremonial county and a local government district comprising London's main central business district CBD. The City of London is commonly referred to simply because the city is also colloquially known as the Square Mile. (photo by Mike Kemp/In Pictures via Getty Images)
Mike Kemp | In images | Getty Images
According to data from the British Office for National Statistics (ONS), the British economy shrank unexpectedly in October.
Gross domestic product fell by an estimated 0.1% month on month, the ONS said on Friday, with officials attributing the downturn to a decline in manufacturing output. Economists polled by the Reuters news agency had forecast a 0.1% increase in GDP for October.
It marked the country's second consecutive economic downturn, following a 0.1% decline in GDP in September.
Real GDP is estimated to have grown by 0.1% in the three months to October, the ONS said, compared with the previous three months ending in July.
The pound sterling fell as a result of the disappointing results and was trading 0.3% lower against the US dollar at $1.2627 at 7.45 am London time.
In a statement Friday, British Chancellor of the Exchequer Rachel Reeves admitted October's figures were “disappointing” but defended the government's divisive economic strategies.
“We have put in place policies to deliver long-term economic growth,” she said, citing changes such as a corporate tax cap and the launch of a 10-year infrastructure strategy.
In October, Reeves unveiled the government's first budget since replacing the long-standing Conservative government in July.
The budget included plans by Prime Minister Keir Starmer's government to increase taxes by £40 billion ($50.5 billion). Reeves said at the time that this would be achieved through a series of new policy measures, including an increase in employers' social security payments – a tax on income – as well as an increase in capital gains taxes and the elimination of winter fuel payments to retirees.
Some policy measures were met with much criticism. For example, the rise in National Insurance payroll tax has led to warnings from companies that they are less likely to hire new workers, with a report from recruitment site Indeed this week suggesting that the policy has already had an impact on UK job vacancies.
