Blitz Bureau
Britain’s economy shrank for the second month in a row in October in the run-up to the Labour Government’s first Budget. Gross domestic product contracted by 0.1 per cent monthon-month in October, as it did in September, the Office for National Statistics said, according to a Reuters report.
It was the first consecutive drop in monthly GDP – which is volatile and prone to revision – since March and April 2020, when Britain enforced its first coronavirus lockdown.
Serious pressure
The ONS said that activity had stalled or declined with pubs, restaurants and retail among sectors reporting “weak months”, the BBC reported.
Chancellor Rachel Reeves said the figure was “disappointing”, but added: “We have put in place policies to deliver long-term economic growth.” The opposition Conservatives said the growth outlook was under serious pressure because of Labour’s first moves in power. Shadow Chancellor Mel Stride said: “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, a leading think-tank, said it expected the economy would stagnate in the fourth quarter of 2024.
Shortly after becoming the Prime Minister in July, Keir Starmer had warned that the Budget would be “painful” following 14 years of Tory Government. He later denied that he was talking down the economy. KPMG’s chief economist Yael Selfin said that activity was “held back by uncertainty ahead of the Budget on October 30” as businesses and consumers held back on spending.
But some industries, such as real estate, law firms and accountancy, brought forward work before Reeves announced the Budget, the ONS said.
Consumer confidence
Separately, a survey measuring consumer confidence in December found people were a little more positive about their personal finances for the year ahead.
The findings from market research firm GfK, however, found that “views on the economy are unchanged from November which suggests people don’t know where we are going”. “In a nutshell, it’s the continuing uncharitable view on the UK’s general economic situation that’s suppressing consumer confidence,” said Neil Bellamy, consumer insights director at NIQ GfK.
