UK Economy Unexpectedly Shrinks in October

The UK economy unexpectedly contracted in October, with Gross Domestic Product (GDP) falling by 0.1% compared to the previous month. This decline, reported by the Office for National Statistics (ONS) on Friday, has been attributed to a drop in production output. It contrasts with economists' forecasts, who had predicted a 0.1% increase in GDP for the month.

This contraction indicates that the UK economy has shrunk for the second consecutive month, having also experienced a 0.1% decrease in September. Despite the monthly declines, the ONS noted that real GDP showed a marginal growth of 0.1% in the three-month period ending in October compared to the preceding three-month period ending in July.

Following the release of the economic data, the British pound weakened, dropping 0.3% against the US dollar to 1.2627 dollars at 07:45 London time.

UK Chancellor Rachel Reeves acknowledged the disappointing nature of the October figures in a statement on Friday. However, she emphasized that the government's economic policies aim to promote long-term growth. Reeves highlighted the introduction of a cap on corporate tax and the initiation of a decade-long infrastructure plan as key components of the government’s strategy to encourage economic expansion.