UK economy shrinks for second consecutive month
A shopper walks past a person begging on the street, on Piccadilly in London, Britain, December 13, 2024. REUTERS/Toby Melville
Britain’s economy contracted for the second straight month in October, marking the first back-to-back decline in output since the onset of the COVID-19 pandemic.
Gross domestic product (GDP) fell by 0.1% in both October and September, according to data from the Office for National Statistics (ONS).
The ONS highlighted “mixed” anecdotal evidence, with some companies attributing reduced turnover to uncertainty surrounding the government’s budget statement, while others expedited activity in anticipation of its impact.
The contraction occurred as new Chancellor Rachel Reeves prepared to unveil a budget featuring significant tax increases for businesses.
October’s data revealed a stagnant services sector, alongside declines in manufacturing and construction output. This downturn adds to a streak of disappointing economic indicators, including sluggish retail sales and subdued business surveys, ahead of the Labour Party government’s budget announcement on October 30.
Reeves, who alongside Prime Minister Keir Starmer has prioritized economic growth in Labour’s election campaign, acknowledged the challenges. “While the figures this month are disappointing, we have put in place policies to deliver long-term economic growth,” she said in a statement.
The opposition Conservatives criticized the government’s approach, citing the impact of tax hikes. Mel Stride, the Conservative economic spokesperson, remarked, “This fall in growth shows the stark impact of the Chancellor’s decisions and continually talking down the economy.”
The National Institute of Economic and Social Research forecasts stagnation for the UK economy in the final quarter of 2024, raising concerns over the broader growth outlook as businesses and consumers grapple with tightening fiscal policies.
